New York Mortgage Trust is staging a consent solicitation to support its latest move into what it considers the right mix and amount of less credit-sensitive assets and higher yielding ones.

The company is asking for certain bond investors’ permission to exceed a maximum 8-to-1 debt-to-equity ratio it’s contractually obligated to ensure it meets on the last day of each fiscal quarter, which follows other efforts it has engaged in to raise funds for new investment.

NYMT’s strategy highlights its growing interest in finding a way to use debt to fund investment that manages potential risks in residential mortgage-backed securities while finding ways to generate strong returns.

“The company has significantly increased investment activity, targeting assets that are less sensitive to credit deterioration, such as agency RMBS, and investments with shorter duration and higher yields, such as business purpose loans,” the company said in its consent solicitation.

A decision for holders of certain NYMT bonds due next year

The company’s consent solicitation is asking certain investors to allow higher debt-to-equity ratios that can lead to perceptions that the company as a whole is taking on more risk in terms of the extent of its borrowing to pursue the aforementioned aims.

The consent solicitation NYMT sent to holders of $100 million in outstanding 5.75% senior notes due next year, and asked them to agree to a payment of $4 per $1,000 principal amount of debt. The solicitation expires at 5 p.m. in New York on June 12. 

As of March 31, the company’s liquidity position included $173 million in available cash and equivalents with the exclusion of consolidated real estate variable-income entities.

It also included the following unencumbered assets: $256.8 million worth of investment securities and $100.2 million in residential loans.

How agency RMBS, BPL investments have impacted financials

NYMT’s investments, meanwhile, contributed to a 55% year-over-year increase in interest income in the first quarter.

Broader market volatility resulting from uncertainty about the impacts of changing tariffs and how they’ll be impacted by related court challenges had an upside for the company in the first quarter, according to executives.

“We took advantage of the higher spreads and interest rate gyrations to meaningfully increase our quarterly purchases concentrated in agency RMBS,” President Nicholas Mah said during the company’s quarterly earnings call.

The company’s repositioning toward agency RMBS and business purpose loans in the past two years has had a positive impact on earning available for distribution, Chief Financial Officer Kristine Nario-Eng said during the call.

The metric is considered important in the context of REITs that must distribute a significant amount of their income to equity shareholders.

EAD per share rose to $0.20 in the first quarter of 2025 compared to $0.16 the previous fiscal period. 

“This strategic shift also contributed to an increase in quarterly EPS contributions from adjusted net income to $0.40 per share, up from $0.36 per share in the prior quarter and $0.29 per share a year ago,” she said.

As of early afternoon in New York, NYMT’s shares had fluctuated between $6.44 and $6.54 per share with a slight downward trend.

Views on whether agency reform could impact bonds

When asked about what possible change in the government’s relationship with agencies in conservatorship could mean for bonds it invests in, CEO Jason Serrano said there are potential implications for rates, liquidity and securities prices, but they are unlikely to surface immediately.

“In the near term and medium term, we don’t see that being an influence in our activities,” he said during the company’s earnings call.