Bondholders Face Dividend-Related Setback with Redwood Trust Notes

Investors holding Redwood Trust’s senior notes encountered an unfavorable market development, contrasting the typical celebration surrounding dividend distributions. The company’s high-yield bonds are now trading without rights to their next coupon payment, a situation poised to negatively impact their market value. This scenario illustrates how corporate distributions can trigger immediate price declines for fixed-income securities.

Market mechanics dictate a downward adjustment for two specific Redwood Trust bond issues due to the ex-dividend date. The 9.125% notes (RWTN) are projected to open approximately 2.23% lower, reflecting the deduction of the upcoming $0.57031 per note interest payment from the trading price. Similarly, the 9.00% notes (RWTO) face pressure from their $0.5625 per note distribution. While this price Read more...