All written or oral forward-looking statements that we make or that are attributable to us are expressly qualified by this cautionary notice. We expressly disclaim any obligation to update the information in any public disclosure to any forward-looking statements later it turns out to be inaccurate.Operator Good morning, ladies and gentlemen. Welcome to Invesco Mortgage Capital Inc.’s Investor Conference Call, August 2, 2012. All participants will be on a listen-only mode until the question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded. I would now like to turn the call over to the speakers for today, Richard King, Chief Executive Officer; John Anzalone, Chief Investment Officer and Don Ramon, Chief Financial Officer. Mr. King, you may begin. Richard King – Chief Executive Officer Thanks, operator. Good morning everybody and welcome to Invesco Mortgage Capital’s second quarter earnings call. We’re pleased to announce earnings of $0.68 and a book value of $18.40. In our first quarter earnings call in May, we emphasized important areas of focus for us in the second quarter. And those were most importantly maintaining a stable book value and providing our shareholders with a competitive dividend. We accomplished each of these goals in the second quarter, primarily by maintaining low agency prepayments, continuing to add duration into the rate rally, and maintaining a high-quality credit portfolio. As a result, we also continued to strengthen the balance sheet. Despite the recent weakness in the U.S. economy, we are decisively upbeat about IVR’s prospects in coming quarters. The housing market is showing signs of life and that’s benefiting the non-agency market. Operation Twist was extended and we believe the Fed is moving ever closer to QE3 shall be needed. Continued central bank intervention and risk aversion will likely keep rates low and may send them even lower. As we have seen in an unusual investment environment like this, fixed income investors are starved for yields. It’s leading them to seek out high-quality cash flows backed by collateral, collateral that is de-linked from all the ongoing uncertainty regarding the European debt crisis.
Investors searching for income are definitely attracted to government guaranteed debt that yields more than U.S. treasuries. We believe IVR’s mortgage investments are well-positioned to benefit in this environment. We have seen a rallying credit that gained strength after the Greek elections and the Twist extension. There has been increasing rate commission on the part of investors that lower yields are here for a while and that they should consider transitioning away from treasuries, because the yield compression and credit assets is likely to continue. For that reason and the hopeful signs that have emerged in housing markets, we expect non-agency RMBS will perform well even as the economy continues to struggle and foreign markets remain under pressure.Agency mortgages have continued to rally as well due to only modestly higher prepayments and we do expect this trend to continue. The conviction behind our strategy is strong. The money raised from our successful preferred offering was invested within days in high-quality bonds as we found some attractive relative value opportunities in credit. At this point in time on the margin we prefer credit from a relative value standpoint. At the same time, we continue to believe agency mortgages will benefit from the muted prepayment environment and the positive supply demand dynamic. Most importantly we see this environment continuing to benefit IVR’s book value and our ability to maintain an attractive and competitive dividend. On July 19, IVR successfully issued $135 million of $25 par preferred stock. I’m also happy to report we’ll be closing on an additional $5 million today from the Greenshoe. We were able to procure a very attractive 7.75% coupon on the shares. We’ve raised the capital because as I mentioned earlier we see a great opportunity to buy credit assets. The timing was good on the preferred issuance because that market has seen multiple billions in redemptions and the demand for paper is strong. Read the rest of this transcript for free on seekingalpha.com