MFA Financial: Floating-Rate Preferred Balancing Credit Risk With Higher Yield And Lower Duration

2026-06-30 09:53:44 ET

MFA Financials ( MFA ) has two series of outstanding preferred stocks. The point of focus for the current analysis would be on the floating-rate Series ( MFA.PR.C ). These shares have a spread of ~5.345 % over LIBOR (now 5.345% over SOFR plus a credit spread adjustment). The current discount to par value has resulted in the trailing market yield exceeding ~10%, with the trailing yield being ~10.37% , which would continue to fluctuate with changes in SOFR rates. Nevertheless, whether it's a ~10.37% trailing yield or a ~5.345% spread, inherently this yield is the result of the underlying credit exposure. The allocation therefore remains one of higher risk and is only suitable for an investor willing to absorb increased credit risk in lieu of higher returns....

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