Chimera Investment Corporation Announces Pricing of Public Offering of Senior Notes

Rhea-AI Summary

Chimera Investment (NYSE: CIM) has announced the pricing of a $65 million public offering of 9.250% senior notes due 2029. The company has granted underwriters a 30-day option to purchase an additional $9.75 million in notes. The offering is expected to close on August 19, 2024, with the notes to be listed on the NYSE under the symbol 'CIMO'. CIM plans to use the proceeds to finance mortgage asset acquisitions, including residential mortgage loans, RMBS, CMBS, and other targeted assets. The notes will pay interest quarterly and mature on August 15, 2029, with an option for early redemption from August 15, 2026.

Positive

• Raising $65 million through senior notes offering
• Potential for additional $9.75 million from underwriters' over-allotment option
• Notes to be listed on NYSE, potentially increasing liquidity
• Funds to be used for acquiring mortgage assets and general corporate purposes
• Quarterly interest payments to noteholders

Negative

• 9.250% interest rate on notes may increase debt servicing costs
• Potential dilution of shareholder value due to increased debt
• Additional financial obligations may impact company's balance sheet

Insights

Financial Analyst

Chimera Investment 's $65 million senior notes offering at a 9.250% interest rate is a significant move. The high yield reflects current market conditions and CIM's risk profile. This debt issuance will provide capital for acquiring mortgage assets, potentially boosting the company's portfolio and income generation capacity.

However, the high interest rate may pressure profitability. Investors should monitor how effectively CIM deploys this capital and whether the returns on new investments outpace the cost of this debt. The option to redeem after August 2026 provides some flexibility, but also indicates a long-term commitment to this expensive financing.

Market Research Analyst

This offering signals confidence in Chimera's business model and the broader mortgage market. The $65 million raise, with potential for $74.75 million if over-allotments are exercised, suggests strong investor appetite for high-yield debt in the current economic climate.

The planned NYSE listing under 'CIMO' could enhance liquidity and attract a broader investor base. However, the 9.250% yield is notably high, potentially indicating market perception of elevated risk in Chimera's business or the broader mortgage sector. This could impact investor sentiment towards CIM's equity and influence its cost of capital for future fundraising efforts.

NEW YORK--(BUSINESS WIRE)-- Chimera Investment Corporation (NYSE: CIM) (the “Company”) announced today the pricing of an underwritten public offering of $65 million aggregate principal amount of its 9.250% senior notes due 2029 (the “Notes”). The Company has granted the underwriters a 30-day option to purchase up to an additional $9.75 million aggregate principal amount of the Notes to cover over-allotments. The offering is expected to close on August 19, 2024, subject to the satisfaction of customary closing conditions.

The Company intends to apply to list the Notes on the New York Stock Exchange under the symbol “CIMO” 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 November 15, 2024. The Notes will mature on August 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 August 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, New York, New York 10014
Attn: Prospectus Department
Toll-Free: 1-800-584-6837

RBC Capital Markets, LLC
Brookfield Place, 200 Vesey Street, 8th Floor, New York, NY 10281
Attn: Transaction Management
Email: rbcnyfixedincomeprospectus@rbccm.com
Toll-Free: 1-866-375-6829

UBS Securities LLC
1285 Avenue of the Americas, New York, New York 10019
Attn: Prospectus Department
Toll-Free: 1-888-827-7275

Wells Fargo Securities, LLC
608 2nd Avenue South, Suite 1000
Minneapolis, MN 55402
Attn: WFS Customer Service
Email: wfscustomerservice@wellsfargo.com
Toll-Free: 1-800-645-3751

Keefe, Bruyette & Woods, Inc.
787 Seventh Avenue, 4th Floor, New York, NY 10019
Attn: Capital Markets
Toll-Free: 1-800-966-1559

Piper Sandler & Co.
1251 Avenue of the Americas, 6th Floor, New York, NY 10020
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 real estate investment trust, or, REIT, for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended, or 1940 Act; our expectations regarding materiality or significance; and the effectiveness of our disclosure controls and procedures.

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 Securities and Exchange Commission (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

FAQ

What is the size of Chimera Investment 's (CIM) new senior notes offering?

Chimera Investment (CIM) is offering $65 million in aggregate principal amount of 9.250% senior notes due 2029, with an option for underwriters to purchase an additional $9.75 million.

When will CIM's new senior notes mature?

The senior notes offered by Chimera Investment (CIM) will mature on August 15, 2029.

How does CIM plan to use the proceeds from the senior notes offering?

CIM intends to use the proceeds to finance the acquisition of mortgage assets, including residential mortgage loans, RMBS, CMBS, and other targeted assets, as well as for general corporate purposes such as repaying outstanding debt and improving liquidity.

What is the interest rate and payment schedule for CIM's new senior notes?

The senior notes have a 9.250% interest rate and will pay interest quarterly in cash on February 15, May 15, August 15, and November 15 of each year, starting November 15, 2024.

When can CIM redeem the senior notes?

Chimera Investment (CIM) may redeem the notes, in whole or in part, at any time on or after August 15, 2026, at the company's option.