The Devil is in the Details

Newcastle, RAIT Financial: The Long Case for REITs

Positive fair value adjustments based on declining prices for a company's liabilities implicitly assumes that a company has the capital (or access to it) to repurchase those liabilities at a discount to face and issue new liabilities at par. Last time I checked, NCT cut its dividend to preserve capital, sold $1.3bn of assets at a loss (including $700m+ of GSE paper), and made little new investments. If NCT could get funding to to repuchase its current debt obligations below par and issue new funding instruments and arb the spread, why is the company so focused on reducing its recourse funding rather than repurchasing its debt?