Question-and-Answer Session
Operator
(Operator Instructions)
Your first call is from the line of Andrew Wessel with J.P. Morgan please proceed.
Andrew Wessel - J.P. Morgan
Good morning, I just have a couple of questions. The first on, you talked about FAS 159 and you had to, obviously, change book value. Are you considering adopting FAS 159 for 2008?
Jonathan Cohen
We began it an assessment, Andrew, of the impact of 159 and it is a fair value option, of course, on assets and liabilities and it’s impact on RCC and while we could benefit on a one time basis from the adjustment particularly on our liabilities, it is not likely that we will adopt to do that.
David Bryant
Let me just add something. We’ve done that now since obviously if we did it on our stated book value, whatever, after January 1 would pop up significantly to a number that would be eye popping but we feel like we don’t need to do that and it adds complications.
Andrew Wessel - J.P. Morgan
Then on borrowing, I didn’t write those numbers down quickly enough. Can you break down under liabilities what’s in CDOs and CLOs and then what’s in REPO and secure credit again.
David Bryant
At December 31?
Andrew Wessel - J.P. Morgan
Yes, please.
David Bryant
1.5 billion of CDO Senior notes
96.7 million in three-year commercial real estate facility
91.7 million in equipment leasing facility
19.7 million in other REPO agreements
51.5 million in TRUF issuances
Andrew Wessel - J.P. Morgan
I guess of that debt, that only 19.7 million is on REPO that’s (inaudible) could be recourse on a daily basis?
David Bryant
Exactly and that is down at approximately 9 million as of now and that is secure by $27 million of securities.
Andrew Wessel - J.P. Morgan
Even on a GAAP that is mind blowing. Even if the market wants to write off $9 million and assume that comes our of GAAP book, it still shows the devaluation and stock price might be a little out of control.
David Bryant
We agree.
Andrew Wessel - J.P. Morgan
Another question about the dividends, I know before that it had been $1.68 dividend target for this year based purely on reinvesting in your own, you’ve already played CDOs, and CLOs, are you still targeting that?
Jonathan Cohen
No, in this market given the repayment fees et cetera, we are just reiterating that $1.64, which is $0.41 per quarter. We see the LIBOR floor is helping us, the increase in fees from our loans and the decrease in equity comp and the increase in spread from our reinvested portfolio because remember we are investing specifically in loan. Bank loans for instance where we are seeing a constant on all the smaller pre-payment rate but you are buying back loans at $0.80 on the dollar and borrowing money and the CLO at 47 bases points.
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