PennyMac issues $172.5M in senior notes due 2030

PennyMac Mortgage Investment Trust (NYSE:PMT), a mortgage REIT with a market capitalization of $1.18 billion and an attractive 11.75% dividend yield, has successfully closed an underwritten public offering of $172.5 million in aggregate principal amount of its 9.00% Senior Notes due 2030. This includes $22.5 million issued through a full exercise of the over-allotment option by underwriters. According to InvestingPro analysis, the company is currently trading at Fair Value.

The offering, which was finalized on Monday, was guaranteed by PennyMac Corp. The Notes will pay quarterly interest at an annual rate of 9.00%, starting May 15, 2025, and are set to mature on February 15, 2030. PennyMac has the option to redeem the Notes wholly or partially after February 15, 2027, at a redemption price equal to the principal amount plus accrued interest. This debt issuance comes at a time when InvestingPro data shows the company’s current ratio at 0.87, indicating some pressure on short-term liquidity.

In the event of a Change of Control Repurchase Event, as defined in the indenture, the company must offer to repurchase the Notes at 101% of the principal amount plus accrued interest.

The Notes rank equally with PennyMac’s current and future unsecured and unsubordinated indebtedness. However, they are effectively subordinated to any secured indebtedness and structurally subordinated to liabilities and preferred stock of its subsidiaries, excluding PennyMac Corp.

An Event of Default may lead to the immediate due and payable status of the outstanding principal and interest of the Notes. The Notes have been approved for listing on the New York Stock Exchange under the symbol "PMTV," with trading expected to commence within 30 days from the date of issue.

This issuance is pursuant to an effective shelf registration statement and related prospectus filed with the Securities and Exchange Commission. The underwriting agreement for the offering was entered into with Morgan Stanley (NYSE:MS) & Co. LLC, Goldman Sachs & Co. LLC, and other financial institutions.

The financial details of the transaction are based on a press release statement.

In other recent news, PennyMac Mortgage Investment Trust (PMT) demonstrated a robust financial performance in the fourth quarter of 2024, surpassing analyst expectations. The company reported earnings per share (EPS) of $0.41, exceeding the forecasted $0.36. Its revenue also outpaced projections, reaching $107.93 million against the anticipated $97.8 million. PMT’s net income for the quarter totaled $36 million. For the full year, the company reported a net income of $119 million, reflecting a return on common equity of 8%. This success is due to the company’s continued focus on securitization and debt management strategies. Looking ahead, PennyMac plans to maintain its securitization pace, targeting approximately one deal per quarter. The company is also exploring opportunities in jumbo loans and prime non-QM securitizations. These are recent developments that showcase PennyMac’s strong financial health and strategic direction.

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