Thornburg Sells $20.5B of Securities To Pay Down Debt
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Thornburg Mortgage Inc., the jumbo-mortgage specialist that stopped taking loan applications last week because of a cash crunch, sold $20.5 billion of securities at a discount to pay down debt it couldn’t refinance.
The Santa Fe, N.M.-based company will record a $930 million loss in the third quarter on the sale of the mortgage-backed bonds, resulting in a probable net loss for the year, the company’s president, Larry Goldstone, said in an interview. Thornburg’s shares, which gyrated between $7.49 and $18.35 last week, dropped as much as 13% yesterday.
Thornburg curtailed new mortgages after investors in the $2.2 trillion American commercial-paper market refused to buy the short-term debt that it used to finance home loans. The company said in a statement that it now expects “to resume normal operations over the next two weeks” instead of yesterday as originally planned.
