American Capital Boosts Liquidity - Analyst Blog
05 March 2013 - 12:40AM
Zacks
Recently, American Capital
Agency Corp. (AGNC) announced an offering
of 50 million equity shares. Gross proceeds from the offering are
expected to be $1.58 billion, excluding expenses. The company
intends to use this amount to obtain additional agency securities
as market conditions warrant and for other corporate purposes.
To cover any over-allotments, American Capital plans to offer a
30-day option to the underwriters to purchase an additional 7.5
million shares. The offering is expected to close on Mar 5, 2013,
subject to customary closing conditions.
J.P. Morgan Securities LLC, Citigroup Inc
(C), BofA Merrill Lynch of Bank
of America Corporation (BAC), The
Goldman Sachs Group, Inc. (GS), Credit
Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC acted
as joint book-running managers for the public offering.
We expect that the offering would aid the company achieve financial
flexibility and position it favorably to pursue investment
opportunities, which will go a long way in improving the top-line
growth. However, the resulting impact of share dilution cannot be
ignored.
Earlier last month, American Capital reported fourth-quarter
results with net spread income per share of 89 cents, which fell
short of the Zacks Consensus Estimate of $1.01. However, it
exceeded the prior quarter figure of 79 cents per share.
During the fourth quarter, American Capital recorded an annualized
economic return on common equity of 5%. As of Dec 31, 2012, the
company's investment portfolio comprised $85.2 billion worth of
agency securities and $12.9 billion of net TBA (to-be-announced)
mortgage positions, at fair value.
As of Dec 31, 2012, American Capital’s cash position stood at $2.4
billion.
American Capital currently has a Zacks Rank #3 (Hold).
AMER CAP AGENCY (AGNC): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
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