Mortgage bond sales put on hold as investors demand yield
A growing list of mortgage lenders is holding off on offerings of bonds backed by home and commercial-property loans as investors demand more compensation to take on the risk amid growing turbulence in rates markets.
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Figure Technology Solutions Inc. was the latest to put a break on fundraising plans. A firm unit has decided to postpone a $346 million residential mortgage-backed security that it had initially planned to price on Thursday, after struggling to attract sufficient investor demand, according to people familiar with the matter.
“Figure maintains a strong loan marketplace across both securitizations and whole loan sales,” a Figure spokesperson said in an emailed statement. “In this instance, the whole loan execution was stronger.”
The move comes just a few days after Freddie Mac delayed the sale of more than $440 million of bonds tied to apartment-building mortgages and Bridge Investment Group shelved a $1.19 billion commercial real estate collateralized loan obligations offering, a type of debt used to finance risky real estate projects.
Investors are demanding juicier returns to take on mortgage risk as Treasury yields surge and higher financing costs fuel concerns about borrowers’ ability to keep up with payments, pushing issuers to stand down or look for cheaper alternatives.
Al Drago/Bloomberg
Jefferies Financial Group Inc., the firm leading the offering, didn’t immediately respond to a comment request.
New York-based Figure provides revolving credit lines secured by homes. Its offering was backed by a pool of 4,101 mortgage loans maturing in as much as 30 years, one of the people said, asking not to be identified because they’re not authorized to speak publicly. The largest portion of the deal — a AAA rated $256.3 million tranche — was being offered at a spread of about 1.55 percentage points over the benchmark, they added.
