American Capital Agency Raises $325 Million of Capital

Last week, American Capital Agency (issued 13.2 million shares at $26/share, which raised over $325 million of net capital. The offer was accretive to trailing book value per share of $23.54, which would increase book value to about $23.90 per share. However, MBS prices softened in September, and the three companies that raised capital at month end may have tapped the market to increase financial flexibility. Each of these companies leverages their equity with short-term repurchase agreements, and may have received or expected to receive margin calls over the course of the month. However, lower prices on MBS represents an opportunity for balance sheet expansion and could provide upside to earnings and dividends. American Capital Agency Corp closed Friday at $26.98