CIM - CIMN: New Bond From Chimera 9.2% Current Yield

2024-05-31 12:13:49 ET

Summary

• Chimera Investment Corporation has issued $65 million in 9.000% senior notes due 2029, listed on the NYSE under the ticker CIMN.
• The issuance provides an attractive low-cost funding option for CIM, compared to raising funds through preferred equity.
• The underwriting process creates an arbitrage opportunity, with the notes initially priced at a discount before potentially trading back to par.
• The debt is callable starting May 2026 and is senior to the company's preferred equity series.
• CIM could use some funds from the debt issuance to retire the now expensive Series B preferred equity, which has switched to a floating rate.

Thesis

Chimera Investment Corporation ( CIM ) is a well-known mortgage real estate investment trust (or 'mREIT'). The company is popular with the investor community via its high-yielding common and preferred shares, with the added twist of fixed-to-floating conversion issues debated by the market for some of its preferred shares....

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