Western Asset Mortgage Capital Corporation Announces Pricing Of $341.7 Million Residential Whole Loan Securitization

Rhea-AI Summary

Western Asset Mortgage Capital Corporation (WMC) announced the pricing of $341.7 million in Mortgage-Backed Notes, Series 2020-1, to finance residential whole loans. This securitization offers a weighted average fixed interest rate of 1.9% and is set to close around June 29, 2020. The notes, rated AAA(sf) by S&P for certain classes, are being offered to qualified institutional investors. This marks WMC's second securitization, enabling long-term fixed-rate financing.

Positive

• Successful pricing of $341.7 million in Mortgage-Backed Notes.
• Achieved a favorable weighted average fixed interest rate of 1.9%.
• Anticipated AAA(sf) rating from S&P for Class A-1A and A-1B Notes.

Negative

• None.

PASADENA, Calif., June 25, 2020 /PRNewswire/ -- Western Asset Mortgage Capital Corporation (NYSE: WMC) (the "Company") today announced that it has priced an aggregate $341.7 million of Mortgage-Backed Notes, Series 2020-1 (the "Notes") in a residential mortgage-backed securitization comprised of a portfolio of residential whole loans. The Notes, which initially will be issued by Arroyo Mortgage Trust 2020-1 in five classes, were priced with a weighted average fixed interest rate of 1.9% per annum. All of the Notes are anticipated to have a final payment date in March 2055. The Notes will be issued in a private placement to qualified institutional investors. It is expected that S&P will rate the Notes at closing. The anticipated S&P rating for the Class A-1A Notes and the Class A-1B Notes is AAA(sf). The offering is subject to customary closing conditions and is expected to close on or about June 29, 2020.

"This is the Company's second securitization, enabling us to finance these residential whole loan assets with longer-term fixed rate financing at attractive levels," said Jennifer Murphy, Chief Executive Officer of the Company.

The Notes are not registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The Notes may only be offered and sold in the United States in accordance with Rule 144A under the Securities Act. This press release does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful under the laws of such jurisdiction.

ABOUT WESTERN ASSET MORTGAGE CAPITAL CORPORATION
Western Asset Mortgage Capital Corporation is a real estate investment trust that invests in, acquires and manages a diverse portfolio of assets consisting of Residential Whole Loans, Commercial Whole Loans, Non-Agency CMBS, GSE Risk Transfer Securities and to a lesser extent Agency CMBS, Agency RMBS, Non-Agency RMBS and ABS. The Company's investment strategy may change, subject to the Company's stated investment guidelines, and is based on its manager Western Asset Management Company, LLC's perspective of which mix of portfolio assets it believes provide the Company with the best risk-reward opportunities at any given time. The Company is externally managed and advised by Western Asset Management Company, LLC, an investment advisor registered with the SEC and a wholly-owned subsidiary of Legg Mason, Inc.

On February 18, 2020, Franklin Resources, Inc. ("Franklin") and Legg Mason announced that they had entered into an agreement under which Franklin would acquire Legg Mason and its affiliates, including Western Asset Management Company, LLC.   The transaction is expected to close in the third quarter of 2020 and is subject to customary closing conditions.  Upon completion of the transaction Western Asset Management Company, LLC would become a wholly owned subsidiary of Franklin.

FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute "forward-looking statements." Operating results are subject to numerous conditions, many of which are beyond the control of the Company, including, without limitation, changes in interest rates; changes in the yield curve; changes in prepayment rates; the availability and terms of financing; general economic conditions; market conditions; conditions in the market for mortgage related investments; and legislative and regulatory changes that could adversely affect the business of the Company; and other factors, including those set forth in the Risk Factors section of the Company's annual report on Form 10-K for the period ended December 31, 2019 and quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2020, respectively, filed with the SEC. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

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SOURCE Western Asset Mortgage Capital Corporation

FAQ

What is the amount of the Mortgage-Backed Notes priced by WMC?

Western Asset Mortgage Capital Corporation has priced $341.7 million in Mortgage-Backed Notes.

What is the interest rate for the Mortgage-Backed Notes issued by WMC?

The Mortgage-Backed Notes have a weighted average fixed interest rate of 1.9% per annum.

When is the closing date for WMC's securitization of Mortgage-Backed Notes?

The securitization is expected to close on or about June 29, 2020.

What is the anticipated S&P rating for WMC's Class A Notes?

The anticipated S&P rating for Class A-1A and Class A-1B Notes is AAA(sf).

What is the significance of WMC's second securitization?

This securitization enables WMC to finance residential whole loan assets with longer-term fixed rate financing.