Real estate investment trust Alesco Financial Inc. said Monday that its reviewing the impact of IndyMac Bancorp's decision to defer making interest payments on its trust preferred securities, including those in Alesco's portfolio.
Alesco holds part of the equity interests in eight collateralized debt obligation transactions that include trust preferred securities issued by the mortgage lender.
IndyMac securities represent 2.43 percent of the total pool of collateral in those eight obligations, Alesco said.
The collateral represents about $2.1 million in aggregate interest payments per quarter to the eight collateralized debt obligations, of which Alesco's proportionate share is about $1.5 million, or about 2 cents per Alesco share per quarter, the real estate company said.
Earlier Monday, IndyMac said it swung to a first-quarter loss as deteriorating credit markets forced it to lower the value of mortgage-backed securities. It also warned that it would not post a profitable quarter in 2008.
Alesco said it expects that IndyMac's deferral to trigger the over-collateralization tests in five of the eight obligations.
Once a test is triggered, Alesco said it will no longer receive current distributions of cash in respect of its equity interests in the obligation until sufficient cash flow is paid to senior debt holders in the obligations.
Alesco said it expects that even if IndyMac does not resume making payments, the five affected obligations will restart making equity distributions within three to eight quarters.
Alesco shares fell 99 cents, or 25.3 percent, to finish at $2.93, while IndyMac shares fell 37 cents, or 10.8 percent, to end at $3.06.
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