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12-05-2025
- Business
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MSC INCOME FUND ANNOUNCES FIRST QUARTER 2025 RESULTS
First Quarter 2025 Net Investment Income of $0.38 Per Share Net Asset Value of $15.35 Per Share HOUSTON, May 12, 2025 /PRNewswire/ -- MSC Income Fund, Inc. (NYSE: MSIF) ("MSC Income") is pleased to announce its financial results for the first quarter ended March 31, 2025. Unless otherwise noted or the context otherwise indicates, the terms the "Company" and the "Fund" refer to MSC Income and its consolidated subsidiaries. First Quarter 2025 Highlights(1) Net investment income of $16.8 million (or $0.38 per share) Total investment income of $33.2 million Net increase in net assets resulting from operations of $15.9 million (or $0.36 per share) Return on equity(2) of 9.5% on an annualized basis for the quarter and 9.7% for the trailing twelve-month period ended March 31, 2025 Net asset value of $15.35 per share as of March 31, 2025 Declared a regular quarterly dividend of $0.35 per share and a supplemental quarterly dividend of $0.01 per share, both payable in the second quarter of 2025, resulting in total dividends declared in the first quarter of 2025 of $0.36 per share Completed $137.5 million in total private loan portfolio investments, which after aggregate repayments of several private loan portfolio debt investments, return of invested equity capital from several private loan portfolio equity investments and a decrease in cost basis due to realized losses on several private loan portfolio investments resulted in a net increase of $88.8 million in the total cost basis of the private loan investment portfolio Net decrease of $25.7 million in the total cost basis of the middle market investment portfolio Further diversified the Fund's capital structure and enhanced its liquidity position by (i) amending the Corporate Facility to increase total commitments to $245.0 million (from $165.0 million), increase the accordion feature to up to a total of $300.0 million and expand and diversify the lender group to seven participants and (ii) amending the SPV Facility to decrease the interest rate to the applicable Secured Overnight Financing Rate ("SOFR") plus 2.20% (from 3.00%), extend the revolving period through February 2029 (from February 2027) and extend the final maturity date to February 2030 (from February 2028), with the Corporate Facility and SPV Facility each as defined in the Liquidity and Capital Resources section below Entered into an amended advisory agreement effective upon the listing of the Fund's common stock on the New York Stock Exchange ("NYSE") during January 2025 (the "Listing") to, among other things, (i) reduce the annual base management fees payable by the Company to 1.5% of its average total assets (with additional future contractual reductions based upon changes to the Company's investment portfolio composition), (ii) reduce to 17.5% the subordinated incentive fee on income payable by the Company, subject to a 50% / 50% catch-up feature, (iii) reduce to 17.5% and reset the incentive fee on cumulative net realized capital gains payable by the Company and (iv) establish a cap on the amount of expenses payable by the Company relating to certain internal administrative services, which varies based on the value of the Company's total assets In commenting on the Company's operating results for the first quarter of 2025, Dwayne L. Hyzak, MSC Income's Chief Executive Officer, stated, "We are pleased with the Fund's performance in the first quarter, which delivered favorable results and a return on equity of just under 10%. We believe that the first quarter performance provides visibility to the opportunity for continued favorable performance and the potential for increased net investment income and dividends in the future as we work to grow the Fund's investment portfolio in 2025 and 2026 and achieve increased investment portfolio diversification through the increased current liquidity and the path to additional debt capacity obtained through the Fund's successful listing on the New York Stock Exchange and the related equity offering in January 2025." First Quarter 2025 Operating Results(1) The following table provides a summary of the Fund's operating results for the first quarter of 2025:Three Months Ended March 31,20252024Change ($)Change (%)(in thousands, except per share amounts) Interest income $ 27,424$ 29,059$ (1,635)(6) % Dividend income 5,1422,4722,670108 % Fee income 6612,419(1,758)(73) % Total investment income $ 33,227$ 33,950$ (723)(2) % Net investment income $ 16,788$ 14,546$ 2,24215 % Net investment income per share $ 0.38$ 0.36$ 0.025 % Net increase in net assets resulting from operations $ 15,875$ 10,589$ 5,28650 % Net increase in net assets resulting from operations per share $ 0.36$ 0.26$ 0.1038 % The $0.7 million decrease in total investment income in the first quarter of 2025 from the comparable period of the prior year was principally attributable to (i) a $1.8 million decrease in fee income, primarily due to decreased exit, prepayment and amendment activity and (ii) a $1.6 million decrease in interest income, primarily due to an increase in investments on non-accrual status and a decrease in interest rates on floating rate investment portfolio debt investments primarily resulting from decreases in benchmark index rates, partially offset by higher average levels of income producing investment portfolio debt investments. The decrease in total investment income was partially offset by a $2.7 million increase in dividend income, primarily due to an increase in dividend income from the Fund's lower middle market ("LMM") portfolio investments. The $0.7 million decrease in total investment income in the first quarter of 2025 includes the impact of a net decrease of $1.3 million in certain income considered less consistent or non-recurring, primarily related to a $1.6 million decrease in such fee income, partially offset by small increases in such dividend income and interest income when compared to the same period in 2024. Total expenses, net of waivers, decreased by $3.0 million, or 15.3%, to $16.4 million in the first quarter of 2025 from $19.4 million for the same period in 2024. This decrease was principally attributable to (i) a $1.6 million decrease in incentive fees and (ii) a $1.3 million decrease in interest expense. The decrease in incentive fees was primarily attributable to the transition to the amended advisory agreement effective upon the Listing. The decrease in interest expense is primarily related to decreased weighted-average interest rates on the Fund's Credit Facilities (as defined in the Liquidity and Capital Resources section below) based upon the decreases in benchmark index rates for these floating rate debt obligations and reductions to the spreads since the first quarter of 2024, partially offset by an increase in weighted-average outstanding borrowings used to fund the growth in the Fund's investment portfolio. The Fund's ratio of total non-interest operating expenses, excluding incentive fees, as a percentage of quarterly average total assets, or the Operating Expenses to Assets Ratio, decreased to 1.9% on an annualized basis for the first quarter of 2025, from 2.2% for the first quarter of 2024, primarily as a result of the decreased base management fee percentage under the amended advisory agreement effective upon the Listing. The $2.2 million increase in net investment income in the first quarter of 2025 from the comparable period of the prior year was principally attributable to decreased expenses, partially offset by the decrease in total investment income, each as discussed above. Net investment income increased by $0.02 per share for the first quarter of 2025 as compared to the first quarter of 2024, to $0.38 per share. The per share increase in net investment income was after the impact of an 11.3% increase in the weighted-average shares outstanding compared to the first quarter of 2024 primarily due to new shares issued in the Fund's follow-on equity offering in January 2025. Net investment income on a per share basis in the first quarter of 2025 is also after a net decrease of $0.04 per share resulting from a decrease in investment income considered less consistent or non-recurring in nature compared to the first quarter of 2024, as discussed above. The $15.9 million net increase in net assets resulting from operations in the first quarter of 2025 represents a $5.3 million increase from the first quarter of 2024. This increase was primarily the result of (i) a $19.9 million increase in net unrealized appreciation from portfolio investments (including the impact of accounting reversals relating to realized gains/income (losses)), (ii) a $2.3 million increase in income tax benefit and (iii) a $2.2 million increase in net investment income, partially offset by a $19.2 million increase in net realized loss from investments resulting from a net realized loss of $21.1 million in the first quarter of 2025 compared to a net realized loss of $1.9 million in the first quarter of 2024. The $21.1 million net realized loss from investments for the first quarter of 2025 was primarily the result of (i) a $13.5 million realized loss on the full exit of a middle market portfolio investment, (ii) $7.7 million of realized losses on the restructures of two private loan portfolio investments, (iii) a $5.5 million realized loss on the partial exit of a middle market portfolio investment and (iv) a $1.2 million realized loss on the restructure of a middle market portfolio investment, partially offset by $6.0 million of realized gains on the full exits of two private loan portfolio investments. The following table provides a summary of the total net unrealized appreciation of $18.8 million for the first quarter of 2025:Three Months Ended March 31, 2025Private LoanLMM (a)Middle MarketOtherTotal(dollars in millions) Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period $ 1.3$ (0.2)$ 20.1$ —$ 21.2 Net unrealized appreciation (depreciation) relating to portfolio investments (3.8)4.5(3.1)—(2.4) Total net unrealized appreciation (depreciation) relating to portfolio investments $ (2.5)$ 4.3$ 17.0$ —$ 18.8 (a) Includes unrealized appreciation on 24 LMM portfolio investments and unrealized depreciation on 12 LMM portfolio investments. Liquidity and Capital Resources As of March 31, 2025, the Fund had aggregate liquidity of $163.5 million, including (i) $39.5 million in cash and cash equivalents and (ii) $124.0 million of aggregate unused capacity under the Fund's corporate revolving credit facility (the "Corporate Facility") and the Fund's special purpose vehicle revolving credit facility (the "SPV Facility" and, together with the Corporate Facility, the "Credit Facilities"), which are maintained to support the Fund's investment and operating activities. Several details regarding the Fund's capital structure as of March 31, 2025 are as follows: The SPV Facility included $300 million in total commitments plus an accordion feature that allows the Fund to request an increase in the total commitments under the facility to up to $450 million. $260.7 million in outstanding borrowings under the SPV Facility, with an interest rate of 6.5% based on the applicable SOFR effective for the contractual reset date of April 1, 2025. The Corporate Facility included $245 million in total commitments from a diversified group of seven lenders plus an accordion feature that allows the Fund to request an increase in the total commitments under the facility to up to $300 million. $160.0 million in outstanding borrowings under the Corporate Facility, with an interest rate of 6.4% based on the applicable SOFR effective for the contractual reset date of April 1, 2025. $150 million of notes outstanding that bear interest at a rate of 4.04% per year (the "Series A Notes"). The Series A Notes mature on October 30, 2026. The Fund maintains an investment grade rating from Kroll Bond Rating Agency, LLC of BBB- with a stable outlook. The Fund's net asset value totaled $718.9 million, or $15.35 per share. The Fund's debt-to-equity ratio was 0.79x as of March 31, 2025, with the decline from the Fund's target leverage levels primarily attributable to the follow-on equity offering executed during the first quarter of 2025. In January 2025, the Fund listed its shares of common stock on the NYSE and completed a follow-on equity offering which generated net proceeds of $90.5 million in connection therewith, providing the Fund a significant increase in liquidity and expanding the Fund's ability to utilize additional leverage under its existing regulatory asset coverage requirements, which effectively limit the Fund's current total debt capacity to an amount equal to the Fund's net asset value. On January 29, 2025, the Fund's Board of Directors unanimously approved the application of modified regulatory asset coverage requirements, which will increase the Fund's total leverage capacity on January 29, 2026 to an amount effectively equal to two times the Fund's current total leverage capacity. Investment Portfolio Information as of March 31, 2025(3) The following table provides a summary of the investments in the Fund's private loan portfolio and LMM portfolio as of March 31, 2025: As of March 31, 2025 Private LoanLMM (a) (dollars in millions) Number of portfolio companies8457 Fair value$ 767.8$ 439.7 Cost$ 790.0$ 356.3 Debt investments as a % of portfolio (at cost)93.5 %67.7 % Equity investments as a % of portfolio (at cost)6.5 %32.3 % % of debt investments at cost secured by first priority lien99.9 %99.9 % Weighted-average annual effective yield (b)11.6 %13.1 % Average EBITDA (c)$ 32.3$ 11.0 (a) The Fund had equity ownership in all of its LMM portfolio companies, and the Fund's average fully diluted equity ownership in those portfolio companies was 9%. (b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments as of March 31, 2025, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status, and are weighted based upon the principal amount of each applicable debt investment as of March 31, 2025. (c) The average EBITDA is calculated using a weighted-average for the private loan portfolio and a simple average for the LMM portfolio. These calculations exclude certain portfolio companies, including four private loan portfolio companies and four LMM portfolio companies as EBITDA is not a meaningful valuation metric for the Fund's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate and those portfolio companies whose primary operations have ceased and only residual value remains. The Fund's total investment portfolio at fair value consists of approximately 61% private loan, 35% LMM, 2% middle market and 2% other portfolio investments. The fair value of the Fund's LMM portfolio company equity investments was 182% of the cost of such equity investments, and the Fund's LMM portfolio companies had a median net senior debt (senior interest-bearing debt through the Fund's debt position less cash and cash equivalents) to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio of 2.8 to 1.0 and a median total EBITDA to senior interest expense ratio of 2.9 to 1.0. Including all debt that is junior in priority to the Fund's debt position, these median ratios were each 2.9 to 1.0.(3)(4) As of March 31, 2025, the Fund's investment portfolio also included: Middle market portfolio investments in eight portfolio companies, collectively totaling $30.8 million in fair value and $40.6 million in cost basis, which comprised 2.4% and 3.4% of the Fund's investment portfolio at fair value and cost, respectively; and Other portfolio investments in six entities, spread across four investment managers, collectively totaling $22.6 million in fair value and $16.5 million in cost basis, which comprised 1.8% and 1.4% of the Fund's investment portfolio at fair value and cost, respectively. As of March 31, 2025, non-accrual investments comprised 2.8% of the total investment portfolio at fair value and 6.1% at cost, and the Fund's total portfolio investments at fair value were 105% of the related cost basis. First Quarter 2025 Financial Results Conference Call / Webcast MSC Income has scheduled a conference call for Tuesday, May 13, 2025 at 10:00 a.m. Eastern Time to discuss the first quarter 2025 financial results. You may access the conference call by dialing 412-902-0030 at least 10 minutes prior to the start time. The conference call can also be accessed via a simultaneous webcast by logging into the investor relations section of the Company's website at A telephonic replay of the conference call will be available through Tuesday, May 20, 2025 and may be accessed by dialing 201-612-7415 and using the passcode 13752815#. An audio archive of the conference call will also be available on the investor relations section of the Company's website at shortly after the call and will be accessible until the date of MSC Income's earnings release for the next quarter. For a more detailed discussion of the financial and other information included in this press release, please refer to the MSC Income Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 to be filed with the U.S. Securities and Exchange Commission ( and MSC Income's First Quarter 2025 Investor Presentation to be posted on the investor relations section of the MSC Income website at ABOUT MSC INCOME FUND, INC. The Company ( is a principal investment firm that primarily provides debt capital to private companies owned by or in the process of being acquired by a private equity fund. The Company's portfolio investments are typically made to support leveraged buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. The Company seeks to partner with private equity fund sponsors and primarily invests in secured debt investments within its private loan investment strategy. The Company also maintains a portfolio of customized long-term debt and equity investments in lower middle market companies, and through those investments, the Company has partnered with entrepreneurs, business owners and management teams in co-investments with Main Street Capital Corporation (NYSE: MAIN) ("Main Street") utilizing the customized "one-stop" debt and equity financing solution provided in Main Street's lower middle market investment strategy. The Company's private loan portfolio companies generally have annual revenues between $25 million and $500 million. The Company's lower middle market portfolio companies generally have annual revenues between $10 million and $150 million. ABOUT MSC ADVISER I, LLC MSC Adviser I, LLC ("MSCA") is a wholly-owned subsidiary of Main Street that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. MSCA serves as the investment adviser and administrator of the Company in addition to several other advisory clients. FORWARD-LOOKING STATEMENTS MSC Income cautions that statements in this press release which are forward–looking and provide other than historical information, including but not limited to MSC Income's ability to successfully source and execute on new portfolio investments and deliver future financial performance and results, are based on current conditions and information available to MSC Income as of the date hereof and include statements regarding MSC Income's goals, beliefs, strategies and future operating results and cash flows. Although its management believes that the expectations reflected in those forward–looking statements are reasonable, MSC Income can give no assurance that those expectations will prove to be correct. Those forward-looking statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including, without limitation: MSC Income's continued effectiveness in raising, investing and managing capital; adverse changes in the economy generally or in the industries in which MSC Income's portfolio companies operate; the impacts of macroeconomic factors on MSC Income and its portfolio companies' businesses and operations, liquidity and access to capital, and on the U.S. and global economies, including impacts related to pandemics and other public health crises, global conflicts, risk of recession, inflation, supply chain constraints or disruptions and changes in market index interest rates; changes in laws and regulations or business, political and/or regulatory conditions that may adversely impact MSC Income's operations or the operations of its portfolio companies; the operating and financial performance of MSC Income's portfolio companies and their access to capital; retention of key investment personnel by MSCA; competitive factors; and such other factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" included in MSC Income's filings with the U.S. Securities and Exchange Commission ( MSC Income undertakes no obligation to update the information contained herein to reflect subsequently occurring events or circumstances, except as required by applicable securities laws and regulations. MSC INCOME FUND, INC. Consolidated Statements of Operations (in thousands, except shares and per share amounts) (Unaudited) Three Months Ended March 31,20252024 INVESTMENT INCOME:Interest, fee and dividend income: Control investments $ 1,442$ 811 Affiliate investments 9,3356,929 Non–Control/Non–Affiliate investments 22,45026,210 Total investment income 33,22733,950 EXPENSES:Interest (8,243)(9,549) Base management fees (4,972)(5,028) Incentive fees (2,023)(3,637) Internal administrative services expenses (174)(2,267) General and administrative (1,027)(1,034) Total expenses before expense waivers (16,439)(21,515) Waiver of internal administrative services expenses —2,111 Total expenses, net of expense waivers (16,439)(19,404) NET INVESTMENT INCOME 16,78814,546 NET REALIZED GAIN (LOSS):Control investments 910 Non–Control/Non–Affiliate investments (21,075)(1,894) Total net realized loss (21,066)(1,884) NET UNREALIZED APPRECIATION (DEPRECIATION):Control investments (833)422 Affiliate investments 2,836(19) Non–Control/Non–Affiliate investments 16,780(1,536) Total net unrealized appreciation (depreciation) 18,783(1,133) INCOME TAXES:Federal and state income, excise and other taxes (483)(329) Deferred taxes 1,853(611) Total income tax benefit (provision) 1,370(940) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,875$ 10,589 NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED (1) $ 0.38$ 0.36 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED (1) $ 0.36$ 0.26 WEIGHTED-AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED (1) 44,680,08440,129,395 MSC INCOME FUND, INC. Consolidated Balance Sheets (in thousands, except per share amounts)March 31,2025December 31,2024 (Unaudited) ASSETS Investments at fair value: Control investments$ 69,273$ 69,878 Affiliate investments367,260351,360 Non–Control/Non–Affiliate investments824,320756,269 Total investments1,260,8531,177,507 Cash and cash equivalents39,45928,375 Interest and dividend receivable12,57811,925 Receivable for securities sold4141 Deferred financing costs3,7751,985 Prepaids and other assets3,3294,113 Deferred tax asset, net2,478625 Total assets$ 1,322,476$ 1,224,671 LIABILITIES Credit Facilities$ 420,688$ 415,688 Series A Notes due 2026 (par: $150,000 as of both March 31, 2025 and December 31, 2024)149,528149,453 Accounts payable and other liabilities1,7454,723 Interest payable7,7156,909 Dividend payable16,86614,487 Management and incentive fees payable6,9948,508 Total liabilities603,536599,768 NET ASSETS Common stock4740 Additional paid–in capital784,601689,580 Total overdistributed earnings(65,708)(64,717) Total net assets718,940624,903 Total liabilities and net assets$ 1,322,476$ 1,224,671 NET ASSET VALUE PER SHARE$ 15.35$ 15.53 MSC INCOME FUND, All prior quarter per share amounts have been retrospectively adjusted for a 2-for-1 reverse stock split completed by the Company, effective as of December 16, 2024. (2) Return on equity equals the net increase in net assets resulting from operations divided by the average quarterly total net assets. (3) Portfolio company financial information has not been independently verified by MSC Income. (4) These credit statistics exclude portfolio companies on non-accrual status and portfolio companies for which EBITDA is not a meaningful metric. Contacts:MSC Income Fund, L. Hyzak, CEO, dhyzak@ E. Gilbert, CFO, cgilbert@ Dennard Lascar Investor RelationsKen Dennard / ken@ Vaughan / zvaughan@ View original content: SOURCE MSC Income Fund, Inc. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
06-05-2025
- Business
- Business Wire
Willdan Expands and Extends Bank Credit Facilities
ANAHEIM, Calif.--(BUSINESS WIRE)--Willdan Group, Inc. (NASDAQ: WLDN) announced today that it has completed an amendment of its existing credit facilities to expand the available borrowing capacity and extend the term of the agreement. The amended agreement increases potential borrowing from $150 million to $200 million and restructures the facilities to provide for a $100 million revolver, a $50 million term loan, and a $50 million delayed-draw term loan. The amended agreement extends the maturity date by five years to May 2030 and reduces the interest rate spread over the Secured Overnight Financing Rate (SOFR). A $75 million accordion feature remains in the agreement. 'This restructured credit facility gives us greater flexibility and control in managing our debt and leverage levels while providing additional capacity to support our investments in growth,' said Mike Bieber, Willdan's CEO. 'We thank our banking partners for their commitments and ongoing support. The five-member loan syndicate responsible for this amendment is led by BMO, as administrative agent, and includes joint lead arrangers Bank of America and JP Morgan.' About Willdan Willdan is a nationwide provider of professional, technical, and consulting services to utilities, government agencies, and private industry. Willdan's service offerings span a broad set of complementary disciplines that include electric grid solutions, energy efficiency and sustainability, energy policy planning and advisory, engineering and planning, and municipal financial consulting. For additional information, visit Willdan's website at or follow Willdan on LinkedIn and Facebook. Forward-Looking Statements Statements in this press release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. It is important to note that Willdan's actual results could differ materially from those in any such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors listed from time to time in Willdan's reports filed with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K filed for the year ended December 27, 2024. Willdan cautions investors not to place undue reliance on the forward-looking statements contained in this press release. Willdan disclaims any obligation to, and does not undertake to, update or revise any forward-looking statements in this press release.
Yahoo
02-04-2025
- Business
- Yahoo
US Five-Year Yield Falls to 2025 Low Before Tariff Unveiling
(Bloomberg) -- US Treasuries added to their recent rally — sending the five-year note's yield to the lowest level since October — as global trade tensions rose ahead of President Donald Trump's tariff announcement. Metro-North Is Faster Than Acela on NYC-New Haven Route After Signal Updates London Clears Final Hurdle for More High-Speed Trains to Europe What Frank Lloyd Wright Learned From the Desert Local Governments Vie for Fired Federal Workers Bank Regulators Fight for Desks as OCC Returns to New York Tower The five-year yield declined as much as six basis points to 3.87% and is 10 basis points lower since Friday. Treasury yield across maturities were lower by similar amounts, approaching their 2025 lows. The gains were maintained despite a report showing private-sector job creation in March exceeded economist estimates. Markets are on tenterhooks ahead of Washington's announcement later in the day which follows months of threats and speculation on the size of possible trade restrictions. Several proposals are said to be under consideration, including a tiered tariff system with a set of flat rates for countries of either a 10% or 20%, Bloomberg reported. 'Both the number and the openness to negotiate will be key,' said Evelyne Gomez-Liechti, a strategist at Mizuho International. 'The more the US administration is open to negotiating could in fact mean that the 20% may not materialize and be lower.' Wednesday's move was compounded by a report that China has taken steps to restrict local companies from investing in the US, a move that could give it more leverage for potential trade negotiations. While China has previously placed restrictions on some overseas investments for reasons linked to concerns about national security and capital outflows, the new measures underscore tensions playing out between the world's two biggest economies as Trump ramps up tariffs. Investors are eager for clarity on the scope of the levies to assess their impact on the already wobbly US economy. Fears that a trade war will dampen consumer sentiment and require more interest-rate cuts from the Federal Reserve to support activity have pushed yields lower in the past weeks. Options traders are betting that Treasuries will extend their rally, as seen in big wagers on lower yields and expectations of deeper-than-expected Fed cuts reflected in interest rate-linked derivatives. Lopsided demand for call options — which are used to bet on higher Treasury prices — is another important indicator. The premium investors are paying for calls relative to put options stands at its highest level since August 2024. A similarly bullish narrative is playing out in the Treasury cash market, with this week's survey of JPMorgan Chase & Co. client positions showing that the level of net longs is at its highest in a month. And an increasingly dovish outlook on rates is evident in recent options activity linked to the Secured Overnight Financing Rate, which closely tracks the Fed's policy rate. Federal Reserve Bank of Chicago President Austan Goolsbee on Tuesday, warned of the negative consequences of any slowdown in consumer spending or business investment due to tariff-related uncertainty. He noted that, in theory, one-time tariffs should have a transitory impact on prices, but added they may have a longer-lasting impact. Money markets are almost fully pricing three quarter-point interest-rate cuts from the Fed this year. Expectations of more easing have helped knock the 10-year Treasury yield from a one-year high around 4.8% in January, as markets prepare for uncertainties surrounding Trump's tariff policies to continue even after Wednesday's announcement. 'Three-and-a-half years of this on/off/on/off-again tariff to-and-from lies ahead,' Michael Brown, a senior research strategist at Pepperstone wrote in a note. 'As that continues, uncertainty will obviously remain at elevated levels, which for the time being should also keep cross-asset volatility high, and see participants lacking conviction to load up on risk.' --With assistance from James Hirai. (Adds ADP employment change data and updates yield levels.) LA Fire Victims Are Betting on a Radical Idea to Help Them Rebuild With Shake Shack in First Class, Airline Food Is No Longer a Joke Trump's IRS Cuts Are Tempting Taxpayers to Cheat China Tells Kids to Study Manufacturing to Fill Factory Jobs Google Is Searching for an Answer to ChatGPT ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
02-04-2025
- Business
- Yahoo
The InterGroup Corporation Announces Strategic Refinancing of Hilton San Francisco Financial District Hotel
SAN FRANCISCO, CA, April 01, 2025 (GLOBE NEWSWIRE) -- The InterGroup Corporation (NASDAQ: INTG) ("InterGroup" or "the Company"), the parent company of Portsmouth Square, Inc. (OTC: PRSI) ('Portsmouth Square'), today announced the successful refinancing of its subsidiary's flagship asset, the Hilton San Francisco Financial District Hotel. This strategic refinancing positions the Company and its subsidiaries for improved financial flexibility and stability in managing their premier hospitality assets. The refinancing was executed through Justice Operating Company, LLC ("Justice"), a wholly owned subsidiary of Portsmouth Square. Justice secured a $67 million mortgage loan agreement with PRIME Finance, arranged by Eastdil Secured, a leading global real estate investment banking firm. The loan carries an interest rate equal to the 30-day Secured Overnight Financing Rate (SOFR) plus 4.80%, and to proactively manage interest rate risk, Justice has secured an interest rate cap, limiting SOFR exposure to a maximum rate of 4.50%. In addition, Justice Mezzanine Company, LLC another subsidiary of Portsmouth Square, has modified its existing mezzanine loan with CRED REIT Holdco LLC, obtaining a principal amount of $36.3 million at a fixed interest rate of 7.25% per annum. Both loans mature in two years, with options to extend for three additional one-year periods, providing added flexibility. "This refinancing underscores InterGroup's ongoing commitment to strategic financial management, enhancing financial stability and operational flexibility across our companies," said David Gonzalez, Chief Operating Officer of InterGroup. "Securing these agreements demonstrates our dedication to prudent financial stewardship and positions us favorably for continued growth and long-term value creation." Further details of the refinancing transactions will be available in the Company's forthcoming periodic report filings with the Securities and Exchange Commission (SEC). ABOUT THE INTERGROUP CORPORATION The InterGroup Corporation is a Delaware corporation formed in 1985, as a successor to Mutual Real Estate Investment Trust, a New York real estate investment trust created in 1965. The Company has been a publicly-held company since M-REIT's first public offering of shares in 1966 and currently trades on the NASDAQ Capital Market. Contact:David Gonzalez, COO(310) 889-2559
Yahoo
04-03-2025
- Business
- Yahoo
Trump deregulation push boosts appeal of swap spread wideners in bond market
By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -A potential move by the Federal Reserve to ease regulations on capital for U.S. banks that would allow them to hold more Treasury securities has unleashed a torrent of so-called swap spread wideners in the bond market. These are bets that increase demand for U.S. Treasuries that will push their yields lower and closer to those of a competing class of risk-free assets called interest rate swaps. Analysts said this trade has already been successful this year. The trade has become popular since the November 5 U.S. election on expectations President Donald Trump's administration will push through deregulation, particularly making capital adequacy rules less restrictive for banks. "Markets have seized on the possibility that looser regulation will free up some capacity for banks to hold more bonds, especially in times of stress," said Steven Major, the global head of fixed income research at HSBC in Dubai. "Early positioning from hedge funds was on the view that regulations would be adjusted. There is more to go." Swap spreads are a major component of the more than $500-trillion interest rate derivatives market. They express the basis-point difference between the fixed rate of an interest rate swap tied to the current Secured Overnight Financing Rate (SOFR) and the Treasury yield of the same maturity. Investors and corporations use swaps to hedge interest rate risk or their exposure to U.S. Treasuries, allowing them to exchange fixed-rate cash flows for floating-rate ones, or vice versa. Swap spreads are currently negative across the curve, meaning yields on Treasuries are higher than those on swaps. But since the beginning of the year, spreads have turned less negative, or in bond market parlance, widened, which means Treasury yields have been trending lower. U.S. five-year swap spreads have widened since January by about five basis points (bps) to minus 29 basis points on Tuesday. The spread reflects the difference between five-year Treasury yields currently at 3.925% and five-year swap rates at 3.6201%. On the long end of the curve, 30-year swap spreads have increased by 8 bps to minus 78 bps. BALANCE SHEET FLEXIBILITY Last month, Fed Chair Jerome Powell told Congress that it was time for the U.S. central bank to ease the supplementary leverage ratio (SLR), which directs banks to hold capital against investments regardless of their risk and effectively discourages these institutions to hold Treasuries. The Fed was forced to temporarily waive the SLR after the Treasury market seized up in March 2020, but it let that relief expire a year later. Cutting SLR would significantly free up additional capacity for banks on their balance sheet, allowing them to add low risk-free assets such as Treasuries without having to allocate capital to cover potential losses. The net effect of Powell's recent comments on the SLR was to push yields lower, consequently widening swap spreads. Swap spreads across the curve have been negative for years, and this has something to do with the structure of lending between the two risk-free assets. "The credit risk between Treasury yields and SOFR swap rates is identical," said Srini Ramaswamy, managing director and head of derivatives strategy at J.P. Morgan in San Francisco. "Treasury yields are higher and that has something to do with terming out the principal." Ramaswamy cited a five-year SOFR swap rate, for instance, which effectively is the average of rates that one can earn by doing lending in the repurchase or repo market daily for five years. The five-year Treasury note, on the other hand, represents lending money to the U.S. Treasury five years at a time. "You give up some flexibility when you lend money for five years to the Treasury, so the compensation is higher, as opposed to lending one day at a time in SOFR swaps," Ramaswamy said. And with the recent transition to risk-free SOFR from Libor, or the London Interbank Offered Rate, there is no longer a premium for credit risk embedded in swap rates that lifted them higher over Treasury yields in the past. Major banks as a result have recommended swap spread wideners to take advantage of looming deregulation. Barclays, in a research note, recommended swap spread wideners in the belly of the curve, specifically, the seven-year spread, where banks prefer to own Treasuries. It believes a change in the SLR could unlock additional bank demand for Treasuries as these financial institutions grow their assets. TD Securities, on the other hand, sees more opportunity on the longer end of the curve, particularly in the 30-year sector, where spreads remain historically tight or more negative. "We believe the widening has more room to run as regulators make progress," said Gennadiy Goldberg, TD's head of U.S. rates strategy.
