Earnings call transcript: Invesco Mortgage Q2 2025 misses forecasts, stock stable

Invesco Mortgage maintains a cautious near-term outlook but remains optimistic about the long-term prospects of Agency mortgages. The company anticipates demand improvement in higher coupon mortgages and expects the Federal Reserve to cut rates 2-3 times in 2026, potentially leading to a steeper yield curve and reduced interest rate volatility. InvestingPro data shows the company maintains a "GOOD" overall financial health score, with particularly strong scores in growth and relative value metrics. The comprehensive Pro Research Report available on InvestingPro provides detailed analysis of IVR’s positioning in the current market environment. InvestingPro data shows the company maintains a "GOOD" overall financial health score, with particularly strong scores in growth and relative value metrics. The comprehensive Pro Research Report available on InvestingPro provides detailed analysis of IVR’s positioning in the current market environment.

Key Takeaways

• Invesco Mortgage reported a significant miss on both EPS and revenue for Q2 2025.
• Despite the earnings miss, the stock price increased marginally by 0.92%.
• The company saw a decline in its economic return and book value per share.
• Invesco Mortgage maintained a strong focus on high coupon Agency RMBS.
• The company projects a cautious near-term outlook but holds a favorable long-term view.

Company Performance

Invesco Mortgage Capital faced challenges in Q2 2025, with economic returns declining by 4.8% and a decrease in book value per share by $0.76. The company has been focusing on higher coupon Agency RMBS, adjusting its portfolio to navigate the current market conditions. Despite these setbacks, Invesco Mortgage has maintained its dividend at $0.34 per common share and reduced its debt to equity ratio from 7.1x to 6.5x.

Financial Highlights

• Revenue: $17.73 million (down from forecast $45.36 million)
• Earnings per share: -$0.40 (down from forecast $0.57)
• Economic return: -4.8%
• Dividend: $0.34 per share
• Debt to equity ratio: decreased to 6.5x

Earnings vs. Forecast

Invesco Mortgage’s actual EPS of -$0.40 was significantly below the forecasted $0.57, resulting in a negative surprise of 170.18%. Revenue also fell short, with a 60.91% miss from the expected $45.36 million. This marks a considerable deviation from expectations, impacting investor sentiment.

Market Reaction

Despite the earnings miss, Invesco Mortgage’s stock price saw a slight increase of 0.92%, closing at $7.63. This stability may reflect investor confidence in the company’s long-term strategy or a broader market trend affecting similar stocks.

Outlook & Guidance

Invesco Mortgage maintains a cautious near-term outlook but remains optimistic about the long-term prospects of Agency mortgages. The company anticipates demand improvement in higher coupon mortgages and expects the Federal Reserve to cut rates 2-3 times in 2026, potentially leading to a steeper yield curve and reduced interest rate volatility.

Executive Commentary

Brian Norris, Chief Investment Officer, stated, "We’re not anticipating a significant decline in mortgage rates here," emphasizing a stable outlook on rate movements. He added, "As the Fed starts to cut and that path becomes a bit more certain, what we’ll probably see is rate fall will come down, mortgage spreads will tighten a little bit."

Risks and Challenges

• Economic downturns impacting mortgage demand.
• Potential volatility in interest rates affecting margins.
• Regulatory changes impacting the mortgage market.
• Market saturation in high coupon Agency RMBS.
• Dependency on Federal Reserve rate cuts for future performance.

Q&A

During the earnings call, analysts focused on the risk of high coupon RMBS and prepayment exposure, with management expressing comfort with current leverage levels and a focus on carry trade strategies. The positive outlook on the Agency CMBS financing market was also highlighted.

Full transcript - Invesco Mortgage (IVR) Q2 2025:

Operator: Welcome to the Invesco Mortgage Capital Second Quarter twenty twenty five Earnings Call. All participants will be in a listen only mode until the question and answer session. As a reminder, this call is being recorded. Now I would like to turn the call over to Greg Seals in Investor Relations. Mr.

Seals, you may begin the call.

Greg Seals, Investor Relations, Invesco Mortgage Capital: Thanks, operator, and to all of you joining us on Invesco Mortgage Capital’s quarterly earnings call. In addition to today’s press release, we have provided a presentation that covers the topics we plan to address today. The press release and presentation are available on our website, invescomortgagecapital.com. This information can be found by going to the Investor Relations section of the website. Our presentation today will include forward looking statements and certain non GAAP financial measures.

Please review the disclosures on Slide two of the presentation regarding these statements and measures as well as the appendix for the appropriate reconciliations to GAAP. Finally, Investo Mortgage Capital is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcast are located on our website. Again, welcome, and thank you for joining us today. I’ll now turn the call over to Invesco’s IBR CEO, John Anzalone.

John?

John Anzalone, CEO, Invesco Mortgage Capital: Thank you, and good morning, and welcome to Invesco Mortgage Capital’s second quarter earnings call. I’ll provide some brief comments before turning the call over to our Chief Investment Officer, Brian Norris, to discuss our portfolio in more detail. Also joining us on the call this morning for Q and A is our President, Kevin Collins our COO, Dave Weil and our CFO, Mark Gregson. Financial conditions were quite volatile during the second quarter, initially driven by a sharply negative reaction to tariff announcements on April 2, which triggered a spike in interest rate volatility and a broad repricing of risk assets. Despite the early turbulence, financial conditions ended the quarter modestly accommodative as interest rate volatility declined and most risk asset valuations rebounded following the announcement of a delay in tariff implementation.

Even with relatively stable inflation data during the quarter and the potential impact of higher tariffs, investor expectations for inflation have moderated as reflected in lower breakeven rates on treasury inflation protected securities. This shift partly reflected growing concerns about the long term effects of trade policies and economic growth. Meanwhile, labor market data continued to signal resilience as the economy added about 150,000 jobs per month during Q2, and the unemployment rate held steady at 4.1%. As the quarter progressed, stable employment data and declining recession risk led to a moderation in market expectations for near term monetary policy action. Federal funds futures market expectations now reflect approximately two rate cuts by year end, an additional two to three cuts in 2026.

Interest rates declined across the front end of the yield curve of the treasury yield curve during the second quarter, while long end rates moved higher, reflecting expectations for accommodative policy from the FOMC alongside concerns about potential increases in treasury issuance over the coming years. As a result of the spike in interest rate volatility and broad sell off in risk assets, agency mortgages sharply underperformed treasuries in April. However, following the announced delay in tariffs, interest rate volatility subsequently declined in May and June, ending the quarter modestly below its starting level. Performance in agency mortgages and agency CMBS, along with broader risk assets, followed a similar trajectory, recovering meaningfully by quarter end after a weak start in April. Finally, valuations at our interest rate swap hedges were negatively impacted as trade policy related volatility combined with fiscal policy concerns to drive swap spreads noticeably tighter.

These factors resulted in an economic return for the quarter of negative 4.8% consisting of our $0.34 dividend per common share and a $0.76 decline in our book value per common share. Our debt to equity ratio decreased from 7.1x at the March to 6.5x at the June, reflecting our belief that elevated near term uncertainty regarding trade and monetary policy warrants a modestly more defensive posture. At quarter end, our $5,200,000,000 investment portfolio consisted of $4,300,000,000 agency mortgages and $900,000,000 agency CMBS, and we maintained a sizable balance of unrestricted cash and unencumbered investments totaling $362,000,000 As of 07/18/2025, we estimate book value per common share to be between $7.99 and $8.31 as Agency mortgages and Agency CMBS both performed well into the beginning of the third quarter. While our near term outlook remains cautious, our long term outlook for Agency mortgages is favorable as we expect demand to improve in higher coupons given attractive valuations, continued stabilization in interest rate volatility and a steeper yield curve. In addition, we remain positive on agency CMBS as limited issuance, strong fundamental performance and stable cash flow profile should provide favorable support for this sector.

Now I’ll turn the call over to Brian for more details.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Thanks, John, and good morning to everyone on the call. I’ll begin on Slide four, which provides an overview of the interest rate and agency mortgage markets over the past year. During the second quarter, the U. S. Treasury yield curve steepened as financial markets adjusted to increased uncertainty regarding trade, monetary and fiscal policy.

Futures markets priced in additional monetary policy easing amid softening U. S. Economic growth expectations and persistent trade policy uncertainty, pushing short term yields lower. In contrast, expectations for a sizable fiscal package and potential tariff driven inflation pressures lifted long term yields. While the ten year treasury yield was little changed over the quarter, the two year yield declined 16 basis points and the thirty year yield increased 30 or 20 basis points.

This steepening brought the two thirty spread to its deepest level in nearly three point five years. As depicted in the chart on the bottom left, as of June 30, Fed funds futures now anticipate five to six cuts by the ’1 more cut than they were pricing in as of March 31 and nearly four more cuts than were priced in a year ago. The chart in the upper right reflects changes in short term funding rates over the past year. Positively, the funding market for our assets remained relatively stable through the volatility in April, with financing capacity robust, haircuts unchanged and one month repo spreads remaining between SOFR plus 15 to 18 basis points. Lastly, the bottom right chart details agency mortgage holdings by the Federal Reserve and U.

S. Banks. As announced by the FOMC at its March meeting, the Federal Reserve began reducing the pace of balance sheet runoff in April. Treasury runoff declined from $25,000,000,000 to $5,000,000,000 per month, while the cap on Agency RMBS runoff remained unchanged at $35,000,000,000 per month. However, actual Agency RMBS runoff has consistently ranged between $15,000,000,000 to $20,000,000,000 per month since early twenty twenty three, well below the stated cap.

Given the reduced pace of Treasury runoff, quantitative tightening is now expected to conclude in 2026, a year later than previously expected. U. S. Banks essentially reinvested paydowns in the second quarter, but we expect bank demand for HCR MBS to increase in the second half of the year as deregulation, a steeper yield curve and further easing of monetary policy provides an attractive environment for deployment of deposits into securities. Slide five provides more detail on the agency mortgage market.

In the upper left chart, we show thirty year current coupon performance versus U. S. Treasuries over the past year, highlighting the second quarter in gray. The quarter began with a sharp decline in valuations as interest rate volatility spiked higher in response to trade policy developments, leading to a broad sell off in financial markets. However, interest rate volatility declined notably after the ninety day pause in tariff implementation and trended lower through the end of the quarter, providing an attractive environment for risk assets as the uncertainty regarding trade and fiscal policy diminished.

Performance across the thirty year coupon stack rebounded, with most coupons ultimately outperforming treasury hedges by a modest 20 to 30 basis points for the quarter. However, carry trade unwinds and fiscal uncertainty resulted in significantly tighter swap spreads on the quarter, resulting in negative hedge returns for agency mortgages versus swaps despite their modest outperformance relative to treasuries. Positively, specified pool pay ups rebounded from April’s poor performance to end the quarter largely where they began, while funding via the dollar roll market for TBA securities remained largely unattractive for most thirty year coupons. Overall, we prefer specified pools over TBA given more attractive and stable funding and a more predictable prepayment behavior, but we will continue to take advantage of attractive alternatives in the dollar roll market when available. Slide six details our Agency RMBS investments and summarizes investment portfolio changes during the quarter.

Our Agency RMBS portfolio decreased 15% quarter over quarter as we managed risk in the April as markets navigated trade policy uncertainty. We sold higher coupons, low pay of specified pools given their elevated sensitivity to potential increases in interest rate volatility. Despite the sales in April, we remain focused in higher coupon Agency RMBS, which benefit from more attractive valuations and an expected further decline in interest rate volatility, while demand from banks, overseas investors and mortgage rates should offset supply through year end. We continue to focus our specified pool allocation on prepayment characteristics that are expected to perform well in both premium and discount environments, with our largest concentration in lower loan balance collateral given more predictable prepayments relative to lower payout pools. Although we are cautious on HCR MBS overall in the near term given recent outperformance and the potential for a modest reversal in the trend of lower interest rate volatility, we believe levered gross ROEs in the low 20s on higher coupons represent a very attractive entry point for H2 mortgage investors with longer

: investment horizons.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Slide seven provides detail on our Agency CMBS portfolio. Given the sharp underperformance in Agency RMBS in April, the relative value between Agency CMBS and Agency RMBS came unattractive, which resulted in no new purchases for the quarter. However, despite the lack of new purchases, the decline in our Agency RMBS portfolio caused a modest increase in our allocation to Agency CMBS for the overall portfolio, which increased from 15% at the end of the first quarter to just over 17% as of June 30. We believe Agency CMBS offers many benefits, mainly through its prepayment protection and fixed maturities, which reduced our sensitivity to interest rate volatility. Leveraged gross ROEs are in the low to mid teens, and we have been disciplined on adding exposure only when the relative value between Agency CMBS and Agency RMBS accurately reflects their unique risk profiles.

Financing capacity has been robust as we continue to finance our purchases with multiple counterparties at attractive levels. We will continue to monitor the sector for opportunities to increase our allocation as the relative value becomes attractive. Recognizing the overall benefits of the portfolio as the sector diversifies risks associated with the Agency RMBS portfolio. Slide eight details our funding and hedge book at quarter end. Repurchase agreements collateralized by our Agency RMBS and Agency CMBS investments declined from $5,400,000,000 to $4,600,000,000 consistent with a decrease in our total assets, while the notional of our hedges declined from $4,500,000,000 to $4,300,000,000 as we actively increased our hedge ratio from 85% to 94%.

The table on the right provides further detail on our hedges at quarter end. Our composition of hedges remained largely unchanged quarter over quarter. Approximately 80% of our hedges consisting of interest rate swaps on a notional basis. On a dollar duration basis, the allocation remained near 70%, given a higher allocation to interest rate swaps at the front end of the yield curve. Our allocation to interest rate swaps negatively impacted book value during the second quarter as carry trade unwinds and heightened concerns over fiscal policy led to sharply tighter swap spreads, ranging from six basis points tighter in the front end to 10 to 12 basis points tighter in the long end.

Slide nine provides detail on

: our

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: capital structure and highlights the improvements we’ve made in recent quarters to reduce our cost of capital. Further improvement in the capital structure remains a focus of our management team as we seek to maximize shareholder returns. To conclude our prepared remarks, financial market volatility increased sharply at the beginning of the second quarter amidst heightened trade policy uncertainty, but declined notably after the ninety day pause in tariff implementation on April 9. From that point, volatility generally trended lower through quarter end, providing a supportive backdrop for risk assets, which rebounded after sharp underperformance in early April. Agency RMBS ultimately modestly outperformed Treasury hedges on the quarter but underperformed swap hedges given significant tightening of swap spreads.

Although increased volatility, swap spread tightening and agency mortgage underperformance negatively impacted our book value in April, positively financial markets have since stabilized. And as of July 18, we estimate our book value per share to be up a little more than 1% since the end of the second quarter. We believe our liquidity position provides substantial cushion for further potential market stress while also providing capital to deploy to our target assets as the investment environment improves. While near term uncertainty warrants a somewhat cautious approach, we believe further easing of monetary policy will lead to a steeper yield curve and an eventual further decline in interest rate volatility, both of which will provide a supportive backdrop for agency mortgages over the long term as they should result in increased demand from commercial banks, overseas investors, money managers and mortgage REITs. Thank you for your continued support for Invesco Mortgage Capital.

And now we will open the line for Q and A.

Operator: Thank you so very much. As we’re now opening for question and answers. Now our first question is from Jason Weaver with Jones Trading. And your line is open now.

Jason Weaver, Analyst, Jones Trading: Hey guys, good morning.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Good

Jason Weaver, Analyst, Jones Trading: morning. Brian, maybe for you. First, taking your comments into account on the preference for high coupon RMBS here, how do you think about the relative risk versus reward just due to possible lower rates, prepayment exposure? And I think sixes have TBA sixes have about a point of premium, 6.5 is about three points. So how do you think about relative value here?

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yes. Thanks, Jason. I think the spreads accurately kind of reflect that risk. And so we see notably wider spreads, nominal spreads and higher coupons. And we think that, that will help kind of cushion, any potential increases.

We did reduce our thirty year 6.5 exposure, during the quarter, and that’s largely reflective of kind of what you’re talking about there. I think 6.5% and higher, are probably bit more exposed than the rest of our coupon stack. So I think our allocation to specified pools certainly addresses that as well. So we have a fair amount of of, you know, low balance, exposure in in those coupons, as well as some of the other stories that that help protect us. So, yeah, we, you know, we don’t own any, TBA as of quarter end.

So, you know, I feel like we’re we’re pretty well protected, you know, to the extent that we do see, notably lower rates. Our expectation is that or at least our house view is that, you know, the Fed will cut a couple times, here at the end of twenty twenty five, and then a few more times in 2026. But really, I think we think that that will result in just a notably steeper curve and not necessarily a significant decline in ten year, which is where kind of the mortgage rate is keyed off of. So we’re not anticipating a significant decline in mortgage rates here. So we think that certainly, 5s, 5.5s and 6s are still pretty well inflated just given the prepayment protection that we own in our pools.

Jason Weaver, Analyst, Jones Trading: Got it. Thank you for that. And, I mean, you mentioned a lot of, sort of risk events are seemingly behind us. Obviously, the amount of monetary easing is still very much in question here. Are there what’s your right now, what’s your comfort zone on leverage?

And any sort of events upcoming that may affect your ability to take that higher?

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yes. I mean, we’re certainly pretty comfortable. I think we’re about zero five turn lower than where we were during the first quarter. And the good news is that with spreads as wide as they are, particularly versus swaps, know, gross ROEs are very attractive, you know, certainly, you know, able to to cover the dividend, you know, from an earnings perspective. And so we don’t feel like we need to take, you know, leverage higher in order to to meet kind of our goals from a from a return perspective.

And so we’re very comfortable with where we are right now. Certainly, you know, tail risk events, have declined, or the potential for tail risk has declined over the course of the second quarter. So as we move into the third quarter, we still think that there are there’s still a fair amount of uncertainty about monetary policy. And ultimately, kind of as tariffs are starting to kind of hit the economy, here in the third quarter, more substantially, the impact that, that will have on inflation and the direction of monetary policy as well. So, we’re pretty comfortable with where we are.

As I think as the Fed starts to cut and that path becomes a bit more certain, what we’ll probably see is rate fall will come down, mortgage spreads will tighten a little bit, and then that would provide, kind of more of an environment that we could potentially take leverage a little bit higher.

Operator: Thank you. Our next question now is from Trevor Cranston with Citizens JMP. And your line is now open.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Hey, thanks. Good morning. Good morning. You talked about the impact of swap spreads obviously in the second quarter. Could you give us an update on your sort of outlook for how you think swap spreads are likely to behave going forward and how that relates to your comfort level around kind of the mix of hedges you guys currently have in place?

Yes. Hey, Trevor. It’s Brian. Yes. I think, certainly, I mentioned we’re kind of 80% notional on interest rate swaps relative to treasury futures.

And I think that’s reflective of kind of our stance on where swap spreads are right now. I think that, you know, certainly from an ROE perspective, it’s very attractive, to hedge with swaps at this point. And we think that there the ultimate direction of swap spreads will be wider, which which will be, you know, beneficial as well. And so, you know, we’re we’re probably at, you know, max kind of allocation to interest rate swaps. And and as we see the environment start to normalize, then we would move more into treasury futures.

You know, what that that ultimate level looks like, is a bit uncertain at this point. But we kinda think that, you know, ROEs are very attractive now, hedging swaps and the direction, the anticipated direction of swap spreads is wider. So that’s also beneficial. So we’re kinda at our, you know, max allocation to swaps. And then, you know, as that changes, we would we would rotate a little bit more in the futures.

Got it. Okay, that’s helpful. Thank you. Thank

Operator: you. Our next question now is from Doug Harter with UBS. And your line is open.

Marissa Lobo, Analyst, UBS: Hi, good morning. Thank you. It’s actually Marissa Lobo on for Doug. I was hoping you could speak to your views on the trajectory of core earnings and what it means for the dividend.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yes. Like I said, you know, I mean, I think ROEs are very attractive, at this at this moment. So, you know, we don’t really anticipate you know, I think, you know, mortgage spreads, generally speaking, have been wide for a while, and that’s been very supportive of the of, you know, the the earnings of the portfolio. And there’s a lot of different reasons for that. There’s, you know, there’s technical reasons.

Clearly, the Fed has been running off their portfolio for a couple of years now. Banks have been notably quiet over the last couple of years as well. And so we don’t anticipate that dynamic changing considerably. You know, banks will will likely start to add here, but the Fed’s gonna continue to roll off. And money managers have been overweight, for a while now as well, and so they’re really dependent on on flows.

And so we kinda think that, you know, spreads should be relatively attractive for for quite a quite a long period. And so we, you know, we anticipate you know, like I said, leverage is where it needs to be in order to to produce the earnings that we are comfortable with.

Greg Seals, Investor Relations, Invesco Mortgage Capital: And so we don’t really anticipate that changing in the near term.

Marissa Lobo, Analyst, UBS: Got it. That’s helpful. Thank you.

Operator: Thank you. Our next question now is from Jason Stewart with Janney Montgomery Scott. Your line is open, sir.

: Hi, thanks. Good morning. So contextual question here in terms of leverage and total return. I think from my perspective, I would expect you know, leverage to move higher when the return opportunities are the highest. But it kinda sounds like you’re managing this to cover the dividend and and mitigate risk.

Is that am I thinking about that the right way? I mean, otherwise, would you not wanna increase leverage when total return opportunities are the highest and and reduce it the opposite way?

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yeah. Hey, Jason. It’s Brian. Yeah. I mean, it’s it’s certainly you know, every environment is different, and so it it it’s challenging to kinda make a blanket statement like that.

You know, I think, you know, ultimately, when when spreads are the widest, and ROEs are the most attractive, you know, that is also there’s reasons for that. Right? There’s there’s heightened uncertainty, heightened interest rate volatility. And so it’s really just kinda managing, within that environment, as it as it comes up. You know, I think you’re you’re right.

You know? I mean, as as ROEs become even more attractive, then, you know, it it would behoove, us to to increase our our leverage in that scenario. But, also, what happens is, you know, as spreads are widening, you know, book value is likely declining and and and leverage is increasing on its own. So it’s really just a kind of a you know, it’s a fine line, but it’s a balancing act between, you know, trying to take advantage of opportunities as they arise without, you know, taking risk, beyond, where we’re comfortable. Right.

John Anzalone, CEO, Invesco Mortgage Capital: And it’s not all leverage here. I mean, because we as Brian mentioned, we are, you know, more exposed to swap spreads now because swap spreads are very wide. So there’s there’s places to do that without necessarily increasing leverage.

: Yeah. Okay. And then and just, Brian, on your, I I missed part of this. Leveraged gross ROEs, was that based on a coupon or on a blended on a portfolio basis? You said low twenties, but I I missed if it was blended or on a Yeah.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: On on higher on higher coupons. You know, kinda probably five and a half and six and a

: Okay. And then so your point is, you know, with leverage where it is today in higher coupons, given your swap book, you feel comfortable on a carry basis earning the dividends. I get that. And then from a you know, just another conceptual question. From a total return versus carry standpoint, you know, is it is it fair to say that you’re leaning more towards carry rather than total return at this point?

Is that the driving factor of how you’re allocating on the asset and the liability side hedge side?

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yes. I think that mortgage spreads and mortgages have performed pretty well, you know, certainly since since April. And and that’s because interest rate volatility has has trended lower during that time. And so, you know, at this point, without banks coming back, which, you know, doesn’t appear to be a a real near term event, you know, I think, notable tightening from here is limited. So that also kind of plays into us, you know, looking at this more as a as a carry trade at this point, until we get a little bit more clarity on the path of monetary policy and the impact of tariffs.

: Got it. That makes sense. All right. Thanks, everybody. Appreciate it.

Greg Seals, Investor Relations, Invesco Mortgage Capital: Thanks, Jason.

Operator: Thank you, gentlemen. Now our last question today is from Eric Hagen with BTIG. Your line is now open.

Eric Hagen, Analyst, BTIG: Hey, thanks. Good morning. I actually have a question on the CMBS position. I mean, how do you guys feel like CMBS spreads could behave when the Fed cuts rates? Do you think there’s a lot of room for spreads to tighten in that market anymore?

And do you feel like conditions in the repo market are stable enough to handle spread widening event, the CMBS market? Thank you.

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Sure. Yes. I’ll take the last one first, think. Financing market for that per agency CMBS has been robust, even probably better than what we initially anticipated when we started investing. And so we have no real concerns about, you know, that market, you know, deteriorating in a widening event.

It it, you know, it it did not, in early April. So we feel very, very comfortable about that. You know? And the first question, the agency CMBS spreads, you know, I think, you know, for the most part, they kind of follow lower coupon Agency RMBS spreads, but with a lower beta. So we feel, again, pretty comfortable there.

We do think that as the Fed starts to cut and Agency RMBS likely tightens as a result of that, that we’ll see Agency CMBS follow suit as well.

Eric Hagen, Analyst, BTIG: Got it. Is the CMBS position a fully levered position? Or is there any liquidity that you can draw from that position at this point?

Brian Norris, Chief Investment Officer, Invesco Mortgage Capital: Yes. I mean, it’s levered, to the extent that the rest of our book is longer term.

Eric Hagen, Analyst, BTIG: Okay. I appreciate you guys. Thank you.

Operator: You. As that was our last question, I now would like to turn it back to management for any closing remarks.

John Anzalone, CEO, Invesco Mortgage Capital: Well, yes, I’d like to thank everyone for joining us on the call, and we look forward to, talking again next quarter. Thanks.

Operator: That concludes today’s event. Thank you for your participation. You may please disconnect at this time.

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