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Resource Capital Corp., Q2 2010 Earnings Call Transcript

Now to the CDO bond buybacks. Including $20 million of debt we purchased in mid-July, we have now purchased approximately $137 million of our debt back. During 2010 we have purchased approximately $76.4 million at a blended discount of about 38%. This includes $20 million of notes that we bought in July for a gain of $6.25 million, or $0.12 per share. Most of these notes were originally rated AAA through A. While we continue to see debt purchase opportunities and believe we will buy another $20 million to $30 million of debt over the next few months, we are dedicated to growing our interest margin and increasing our gains in our investment portfolio through discount purchases.

This has been most obvious in our commercial finance and syndicated bank loan portfolios where our net spread over LIBOR has increased from 252 basis points as of June, 2009, to 270 basis points as of June, 2010. As I said last quarter we believe we can add between $0.12 to $0.20 of net operating income by putting the cash currently in our structured vehicles as well as some unrestricted cash to work both in terms of continuing to buy back our debt as well as with new investments. We have started to see this, and by September this improvement should be very evident in our earning power.

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