PennyMac Mortgage Investment Trust on Monday announced that it's planning a public offering of notes that could be used for purposes that include investments in servicing rights and the paydown of a relatively near-term obligation.
The new notes would be due 2028 and also may fund the purchases of credit risk transfers or other mortgage securities. Correspondent purchases of agency-eligible loans also could be funded. Debt set for possible reduction includes some 5.5% exchangeable notes due next year.
The rate and other terms of the new notes — which PMT will offer with Piper Sandler, Janney Montgomery Scott and Ladenburg Thalman as joint book-running managers — will be set at the time of pricing. Alliance Global Partners and William Blair & Co. will be co-managers.
The offering comes at a time when nonbank investments and financing have been watched closely due to uncertainties associated with interest rates and bank regulation.
It also arrives following PMT's decision to cancel the floating rate portion of a recent preferred stock issue because it was pegged to Libor, a now-defunct rate. Some preferred stock investors disapproved of the move, and say they'll be wary of future securities offerings because of it.
But the new note offering gave the real estate investment trust's stock a lift above $13 from just below that level the previous trading day.
The REIT's sister company, PennyMac Financial Services, also had seen some improvement in the trading price of its shares at deadline Monday morning. Its stock had risen to about $69. Its shares were just below $69 the previous trading day.
More restrictive proposed rules for bank capital that could drive depositories further away from mortgages may create opportunities in correspondent and mortgage servicing rights for the REIT, company leadership recently stated.
Executives from the real estate investment trust affiliate of the Pennymac entity speaking at the Barclays Financial Services Conference last week said there has been some depository withdrawal but it's been limited.
"We're seeing certain banks slow down their pace of activity in correspondent," said David Spector, chairman and CEO at PennyMac Mortgage Investment Trust.
There are early indications of some mild market share gains, said Spector.
"On the correspondent side, we're starting to see some perceived share growth," he said. "We'll find out when the numbers finally come out in October but we're seeing some good activity there, both the government and conventional side."
Servicing sales in general have been slower than expected, said Spector.
"It's not happening at the pace that we thought it would at the beginning of the year," he said. "We've seen some large packages come out of some banks. We're seeing some conventional MSRs come out of very small originators, but not as much as we thought would take place."
Meanwhile, the fact that loan performance has been bearing up to date bodes relatively well for credit-risk transfer securities, Spector said.
"Overall, that investment and the delinquencies that we're seeing there are really at very low levels," he said.
