AGNC Investment (AGNC) Prices Equity Offering Of 40M Shares
Zacks Investment Research | Nov 15, 2018 01:04AM ET
AGNC Investment Corp. (NASDAQ:AGNC) recently announced the pricing of its public offering of 40,000,000 shares of common stock, for expected gross proceeds of $690.8 million, before underwriting discounts and commissions and estimated expenses.
Further, the underwriters have been granted a 30-day option to purchase up to an additional 6,000,000 common shares. The offering, subject to customary closing conditions, will likely close on or around Nov 19, 2018.
AGNC plans to spend these proceeds for targeted acquisitions of various securities. This consists of both agency securities and non-agency securities, including credit risk transfer securities. The company will also allocate funds for general corporate purposes. In addition, it plans to increase its investment in real estate-related assets and hedging instruments.
Amid challenging interest rate and volatile global economic environment, AGNC’s strategy to hedge interest-rate uncertainty augurs well. It provides the company more protection against net asset value fluctuations due to interest-rate changes.
Understandably, the company maintained an elevated interest rate hedge position in the first three quarters of 2018. This enabled AGNC to limit the impact of rising interest rates on its tangible net book value.
Also, the company’s debt/equity ratio of 0.03 is well below its industry’s average of 1.17. Hence, this equity offering is not expected to adversely impact the company’s financial flexibility.
AGNC currently carries a Zacks Rank #3 (Hold). Moreover, the Zacks Consensus Estimate for earnings per share estimates for the ongoing quarter moved marginally upward to 61 cents, over the last month.
However, the company’s tangible net book value remains vulnerable to wider mortgage spreads. Furthermore, as the company prioritizes risk management over incremental returns, robust returns are expected to remain elusive in the short run.
Also, shares of AGNC have underperformed the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.