Major money manager cannot make margin calls. Who will be next? The financial markets have not yet seen the complete fall out of the Corona virus....Aivars Lode
Invesco Mortgage Capital will not be able to fund margin calls on previously scheduled dates because of coronavirus-related turmoil in the financial markets, it said Tuesday.
As a result of the global pandemic, the firm has "received an unusually high number of margin calls from financing counterparties," a news release said.
While margin calls had been timely met through March 20, as of Monday afternoon, Invesco Mortgage Capital notified its financing counterparties that it was not in a position to fund the margin calls that it received that day, the release said.
Additionally, the firm does "not expect to be in a position to fund the anticipated volume of future margin calls under its financing arrangements in the near term as a result of market disruptions created by the COVID-19 pandemic," the release said.
Invesco Mortgage Capital, a subsidiary of Atlanta-based Invesco, is a real estate investment trust that focuses on investing in, financing and managing residential and commercial mortgage-backed securities and mortgage loans.
On Tuesday, a spokeswoman at parent company Invesco said that is still being determined what "near term" will mean for the subsidiary as "there's no definitive time frame" and funding future margin calls will be determined by what Invesco Mortgage Capital sees in the next days and weeks regarding market volatility.
The firm is "engaging in discussions with the financing counterparties to try to work out forbearance agreements," the spokeswoman added.
Invesco Mortgage Capital will also delay payment of its previously announced quarterly cash dividends and provide updates as it continues to evaluate its liquidity situation, the news release said.
By Danielle Walker - Pensions & Investments
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