Existential threat for leveraged rate plays

Based on the price action in mortgage REITs (agency, credit, commercial), and other borrow short/lend long players, there’s real question about whether 1) They’ll be able to continue to find financing, and/or 2) Whether their borrowers can pay them back.

Nearly the entire mortgage REIT sector can be had for less than 50% of book value. Some action today: Annaly (NLY -19.6%), AGNC Investment <<AGNC>, Chimera (CIM -33.3%), Two Harbors (TWO -25.6%), New York Mortgage (NYMT -29%), Invesco (IVR -28.3%), MFA Financial (MFA -34.8%), New Residential (NRZ -36.9%).

Highly popular leveraged Pimco CEFs: Pimco Dynamic Income Fund (PDI -8.1%), Pimco High Income Fund (PHK -12.5%), Pimco Dynamic Credit Credit Income Fund (PCI -9.8%).

Commercial lenders: Starwood (STWD -23.9%), Blackstone Mortgage (BXMT -33.8%), Ladder Capital (LADR -32.5%), Granite Point Mortgage (GPMT -33.9%), Apollo Commercial (ARI -31.4%).

ETFs: MORL, REM, MORT

https://seekingalpha.com/news/3552964-existential-threat-for-leveraged-rate-plays