Chimera Investment Corporation Announces Pricing of Public Offering of Senior Notes
Chimera Investment (NYSE: CIM) announced a public offering of $65 million in 9.00% senior notes due 2029. Underwriters have a 30-day option to purchase up to an additional $9.75 million. The offering is expected to close on May 22, 2024, subject to customary conditions. The notes are to be listed on the NYSE under 'CIMN' and trading is expected to start within 30 days post-issuance. Proceeds will be used to acquire various mortgage assets and for general corporate purposes. Interest on the notes will be paid quarterly starting August 15, 2024, with maturity on May 15, 2029. The notes are senior unsecured obligations and can be redeemed starting May 15, 2026. Joint book-running managers include Morgan Stanley, RBC Capital Markets, UBS Securities, Wells Fargo Securities, Keefe, Bruyette & Woods, and Piper Sandler.
- Pricing of a $65 million public offering of 9.00% senior notes due 2029.
- Additional $9.75 million available through underwriters' option.
- Proceeds to finance mortgage asset acquisitions and other corporate purposes.
- Expected listing on NYSE under 'CIMN' with trading to begin within 30 days of issuance.
- Interest paid quarterly starting August 15, 2024, with maturity on May 15, 2029.
- Redemption of notes allowed starting May 15, 2026.
- The offering is subject to customary closing conditions, which may introduce delays.
- The notes are senior unsecured obligations, implying higher risk compared to secured debt.
- Potential dilution of existing shareholders' value if the additional $9.75 million option is exercised.
Insights
The issuance of $65 million in senior notes by Chimera Investment Corporation, with an additional $9.75 million option, is primarily targeted to enhance liquidity and finance the acquisition of mortgage-related assets. Senior notes are a type of debt that takes precedence over other unsecured debts in the event of liquidation. The 9.00% interest rate indicates a recognition of risk by investors, but also a strong commitment to attract funding under current market conditions.
From a financial standpoint, the raised funds will bolster Chimera's ability to acquire a diverse pool of mortgage assets, likely increasing their revenue potential. However, the higher interest rate on these notes will also increase the company's debt servicing costs, potentially impacting net income in the short term.
For retail investors, the 9.00% interest rate could be seen as a double-edged sword. It reflects potential high returns for noteholders but also underscores the perceived risk associated with the company’s creditworthiness. Monitoring the company’s performance and how effectively it deploys these funds will be key in evaluating the long-term impact on shareholder value.
The move to issue senior unsecured notes also suggests a strategic play to capitalize on current market conditions. By listing the notes on the NYSE under a new ticker symbol “CIMN”, Chimera aims to attract a broader base of institutional and retail investors. This step also increases the stock's visibility and potential liquidity in the market.
The application for listing on the NYSE within 30 days is an effort to provide transparency and tradability, which can enhance investor confidence. The mix of asset acquisitions, including non-Agency RMBS and Agency RMBS, reflects a balanced approach to investing in both less risky and potentially higher yielding mortgage-backed securities.
For retail investors, the strategic allocation of proceeds towards various mortgage assets and general corporate purposes, including debt repayment, signals a methodical approach to growth. However, it’s vital to remain cautious about how shifts in the mortgage market could affect asset values and the overall return on investment for the company.
The Company intends to apply to list the Notes on the New York Stock Exchange under the symbol “CIMN” and, if the application is approved, expects trading in the Notes on the New York Stock Exchange to begin within 30 days after the Notes are first issued.
The Company intends to use the net proceeds of the Notes to finance the acquisition of mortgage assets including residential mortgage loans, non-Agency RMBS, Agency RMBS, Agency CMBS and other targeted assets, and for other general corporate purposes such as repayment of outstanding indebtedness or to pay down other liabilities, working capital and for liquidity needs.
The Notes will be senior unsecured obligations of the Company, and pay interest quarterly in cash on February 15, May 15, August 15 and November 15 of each year, commencing August 15, 2024. The Notes will mature on May 15, 2029, and may be redeemed, in whole or in part, at any time, or from time to time, at the Company’s option on or after May 15, 2026.
Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, UBS Securities LLC, Wells Fargo Securities, LLC, Keefe, Bruyette & Woods, Inc., and Piper Sandler & Co. will serve as joint book-running managers for the offering.
The Notes will be offered under the Company’s existing shelf registration statement filed with the Securities and Exchange Commission. The offering of these Notes will be made only by means of a prospectus and a related prospectus supplement, a copy of which may be obtained by contacting:
Morgan Stanley & Co. LLC
180 Varick St., 2nd Floor,
Attn: Prospectus Department
Toll-Free: 1-800-584-6837
RBC Capital Markets, LLC
Brookfield Place, 200 Vesey Street, 8th Floor,
Attn: Transaction Management
Email: rbcnyfixedincomeprospectus@rbccm.com
Toll-Free: 1-866-375-6829
UBS Securities LLC
1285 Avenue of the
Attn: Prospectus Department
Toll-Free: 1-888-827-7275
Wells Fargo Securities, LLC
608 2nd Avenue South, Suite 1000
Attn: WFS Customer Service
Email: wfscustomerservice@wellsfargo.com
Toll-Free: 1-800-645-3751
Keefe, Bruyette & Woods, Inc.
787 Seventh Avenue, 4th Floor,
Attn: Capital Markets
Toll-Free: 1-800-966-1559
Piper Sandler & Co.
1251 Avenue of the
Attn: Debt Capital Markets
Email: fsg-dcm@psc.com
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes or any other securities, nor shall there be any sale of such Notes or any other securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
About Chimera Investment Corporation
Chimera is a publicly traded real estate investment trust, or REIT, that is primarily engaged in the business of investing directly or indirectly through its subsidiaries, on a leveraged basis, in a diversified portfolio of mortgage assets, including residential mortgage loans, Agency RMBS, Non-Agency RMBS, Agency CMBS, and other real estate related securities.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the offering and the intended use of proceeds. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results, including, among other things, those described in our most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, under the caption “Risk Factors.” Factors that could cause actual results to differ include, but are not limited to: our business and investment strategy; our ability to accurately forecast the payment of future dividends on our common and preferred stock, and the amount of such dividends; our ability to determine accurately the fair market value of our assets; availability of investment opportunities in real estate-related and other securities, including our valuation of potential opportunities that may arise as a result of current and future market dislocations; our expected investments; changes in the value of our investments, including negative changes resulting in margin calls related to the financing of our assets; changes in inflation, interest rates and mortgage prepayment rates; prepayments of the mortgage and other loans underlying our mortgage-backed securities, or MBS, or other asset-backed securities, or ABS; rates of default, forbearance, deferred payments, delinquencies or decreased recovery rates on our investments; general volatility of the securities markets in which we invest; our ability to maintain existing financing arrangements and our ability to obtain future financing arrangements; our ability to effect our strategy to securitize residential mortgage loans; interest rate mismatches between our investments and our borrowings used to finance such purchases; effects of interest rate caps on our adjustable-rate investments; the degree to which our hedging strategies may or may not protect us from interest rate volatility; the impact of and changes to various government programs; impact of and changes in governmental regulations, tax law and rates, accounting guidance, and similar matters; market trends in our industry, interest rates, the debt securities markets or the general economy; estimates relating to our ability to make distributions to our stockholders in the future; our understanding of our competition; our ability to find and retain qualified personnel; our ability to maintain our classification as a REIT for
Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. We do not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these, and other risk factors is contained in our most recent filings with the SEC. All subsequent written and oral forward-looking statements concerning the Company or matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
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Chimera Investment Corporation
Investor Relations
Tel: 888-895-6557
Source: Chimera Investment Corporation
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