Why Annaly Capital Is Allocating More Money to Credit
In the current market environment, finding income can be incredibly difficult. Short-term interest rates are stuck close to zero, and corporate bonds are paying miserly yields. One of the few asset classes providing some sort of yield is real estate investment trusts (REITs).
REITs are coming off a rough year, as COVID-19 triggered widespread business shutdowns and caused dislocations in the bond market. Mortgage REITs in particular had one of their worst periods ever as liquidity dried up in the mortgage market, which triggered a wave of margin calls. But a year later, these stocks have all regained their footing and are looking at a new investment environment. Over the past month, we have seen a sizable increase in the 10-year bond yield.
What is Annaly Capital Management (NYSE: NLY), one of the biggest mortgage REITs, thinking about this environment, and what does it have to offer investors now?