Two Harbors Investment Corp Announces Pricing of Senior Notes Offering
Two Harbors Investment Corp (NYSE: TWO), a prominent player in the mortgage servicing rights (MSR) sector, has announced the pricing of an underwritten public offering of senior notes, a move that could significantly bolster its financial flexibility. The offering is set to raise $100 million through the issuance of 9.375% senior notes due in 2030.
1. Details of the Offering
The senior notes will be issued in minimum denominations of $25, with the opportunity for investors to purchase in integral multiples of $25 thereafter. Additionally, the underwriters have been granted a 30-day option to acquire up to an additional $15 million in aggregate principal amount of the notes, which is designed to cover any over-allotments that may arise during the offering period.
The closing of this offering is anticipated on May 13, 2025, contingent upon the satisfaction of customary closing conditions.
2. Plans for Proceeds
Two Harbors has outlined a strategic plan for the net proceeds from this offering. The funds will be allocated for general corporate purposes, which may include:
- Refinancing or repayment of existing debt, notably the company’s 6.25% senior notes due in 2026.
- Financing the acquisition of target assets, particularly in the areas of MSR, Agency RMBS, and other financial assets, all while adhering to the company’s investment guidelines.
- Potential repurchase or redemption of the company’s common and preferred equity securities.
- Other capital expenditures aimed at enhancing the company’s operational capacity.
3. Interest and Maturity Details
The senior notes will be classified as senior unsecured obligations of Two Harbors. They will pay interest quarterly in cash, with payment dates set for February 15, May 15, August 15, and November 15, starting from August 15, 2025. The notes are scheduled to mature on August 15, 2030, and include the option for Two Harbors to redeem them, either fully or partially, starting May 15, 2027.
4. Underwriters and Market Impact
The offering is being managed by a consortium of financial institutions, including Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Piper Sandler & Co., RBC Capital Markets, LLC, UBS Investment Bank, and Wells Fargo Securities, LLC, all of whom are acting as joint book-running managers.
Two Harbors intends to apply for the listing of the notes on the New York Stock Exchange (NYSE). If approved, trading is expected to commence within 30 days following the issuance of the notes, potentially enhancing liquidity and visibility in the market.
5. Regulatory Compliance
This offering is conducted under the company’s existing shelf registration statement, which was declared effective by the Securities and Exchange Commission (SEC) on February 22, 2024. Investors will be able to access the prospectus and related documents through the SEC’s website or by contacting the respective underwriters.
6. Conclusion
The strategic move by Two Harbors Investment Corp to issue senior notes reflects its commitment to maintaining robust financial health and operational flexibility. As the company navigates the evolving landscape of mortgage servicing rights, this funding mechanism is poised to play a critical role in its growth trajectory and investment strategy. Investors and market watchers alike will be keenly observing the developments as the offering unfolds.
