Several mortgage REITs fell more than 20 percent and were among the top percentage losers on the New York Stock Exchange.
NEW YORK (Reuters) - Shares of mortgage real estate investment trusts plunged on Thursday after Carlyle Capital Corp Ltd <CARC.AS>, a European firm that invests in mortgage-backed securities, failed to meet margin calls and received a notice of default.
Several mortgage REITs fell more than 20 percent and were among the top percentage losers on the New York Stock Exchange.
Carlyle Capital and the mortgage REITs invest in investment-grade mortgage-backed securities issued by Fannie Mae <FNM.N> and Freddie Mac <FRE.N>.
Mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac saw spreads widen against U.S. government debt for a fourth straight day on Wednesday.
!ADVERTISEMENT!Carlyle Capital, a Dutch-listed affiliate of private equity firm Carlyle Group <CYL.UL>, said it had received margin calls totaling more than $37 million from seven financing parties on Wednesday and was unable to meet the demands for extra collateral to cover its market positions for four of them.
"We believe this news will pressure the stock of Annaly and MFA, who run a similar business model, given increased concern about tightening repo-lending standards across banks and brokers," said UBS analyst Omatayo Okusanya II, who covers the mortgage REITs Annaly Capital Management Inc <NLY.N> and MFA Mortgage Investments <MFA.N>.
Okusanya said that he did not believe Annaly and MFA would receive similar margin calls because they are not as heavily levered as Carlyle.
Shares of Anworth Mortgage Asset Corp <ANH.N> were down 21 percent to $6.95 in morning trade on the New York Stock Exchange. Capstead Mortgage Corp <CMO.N> was down 23 percent to $12.48, Deerfield Capital Corp <DFR.N> fell 20 percent to $2.29, Annaly dropped 20 percent to $15.45, and MFA was off 12.5 percent to $7.60.
(Reporting by Ilaina Jonas; editing by John Wallace)
