UPDATE: Nomura Downgrades CYS Investments to Neutral Following 1Q13 Earnings Wrap
In a report published Monday, Nomura analyst Bill Carcache downgraded the rating on CYS Investments (NYSE: CYS) from Buy to Neutral.
In the report, Carcache noted, “The agency mortgage REITs faced a challenging first quarter. Book value declines were a key concern, as the unwinding of QE3 gains continued this quarter. Asset values declined and typical hedging instruments (e.g., swaps, swaptions, and Treasury shorts) were relatively ineffective. Volatility was particularly high this quarter. Spread declines continued across the industry this quarter. That said, the declines in spread were modest relative to the recent past. We're downgrading AGNC and CYS shares to Neutral from Buy based on our view that mortgage market dynamics are increasingly volatile and unpredictable, making for a less attractive risk/reward...Our CYS downgrade is also driven by our view that operating efficiencies have been largely enjoyed and are baked into expectations.”
CYS Investments closed on Friday at $12.01.
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