Chimera Investment Corporation NT 29 Offers 9.25% Return at a DiscountChimera Investment Corporation NT 29 Offers 9.25% Return at a Discount
June 13, 2025 0 Comments 12:00 am
In today’s ever-evolving investment landscape, uncovering value requires looking beyond the obvious. Just as understanding cheap local movers benifits reveals practical ways to save on everyday expenses, digging into overlooked income-generating securities can unlock excellent returns. Chimera Investment Corporation’s NT 29 notes exemplify this, a senior unsecured bond offering high yield, monthly income, and trading at a discount making them an attractive option for savvy fixed-income investors.
What Are Chimera NT 29 Notes?
Chimera Investment Corporation is a well-established mortgage real estate investment trust. Unlike traditional REITs that own physical properties, Chimera invests primarily in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), both agency and non-agency.
The NT 29 notes, issued in 2022 and maturing in March 2029, offer a 9.25% fixed annual coupon, paid monthly. This setup is rare in today’s market, especially from an issuer with a decent credit profile and a long-standing presence in the mortgage sector.
Currently, these notes trade below par value, meaning investors buying now get an enhanced yield-to-maturity often exceeding 9.5% depending on the market price.
Why They’re Trading Below Par
Despite their high coupon, CIMO notes are trading below face value, typically in the mid-to-high $90s. This discrepancy stems from general market volatility, interest rate sensitivity, and some investor skepticism about mREITs due to recent macroeconomic headwinds.
However, this presents a compelling opportunity for fixed-income investors. Buying below par not only locks in a high coupon but also enables additional capital appreciation if held to maturity.
Chimera’s Stability Matters
Chimera is no fly-by-night company. Established in 2007, the firm has weathered several real estate cycles and maintained consistent distributions. While not rated by major agencies, Chimera’s strong asset base, liquidity reserves, and experienced management provide reasonable assurance of debt repayment.
Its capital structure is robust, and it continues to manage risk exposure through strategic asset allocation and hedging. These strengths support the NT 29 note’s credibility, especially compared to speculative high-yield corporate debt.
Ideal for Monthly Income
What makes CIMO particularly interesting is its monthly interest payments, which are rare outside municipal bonds and select preferred shares. This structure appeals to:
Retirees who value predictable income
Fixed-income funds focused on cash flow
Laddered portfolios looking for mid-duration maturity
The NT 29s also offer seniority over preferred stock and equity, providing an extra layer of downside protection.
Better Than Preferreds or Junk Bonds?
CIMO notes hold a unique spot. They offer better protection than preferred shares (due to seniority), but still yield far more than most investment-grade corporates. When benchmarked against junk bonds, NT 29s present comparable yields with arguably lower risk, especially given Chimera’s REIT structure and transparent reporting.
This blend of income, structure, and potential price upside makes CIMO a sweet spot between risk and reward for many fixed-income portfolios.
How to Allocate in Your Portfolio
Core Income Bucket: Add to the fixed-income core for reliable monthly income.
Diversification: Combine with other REIT bonds, dividend stocks, or municipal bonds for tax-optimized yield.
Duration Laddering: Place between short-term and long-term positions to manage interest rate exposure.
Investors focused on income stability and capital preservation will find CIMO notes useful in conservative to moderate portfolios, especially if paired with more liquid assets.
Expert Insight and Further Reading
To better understand how REIT debt fits into a broader investment strategy, consider reviewing research from non-competing financial education sources like Morningstar’s Fixed-Income Insights. Their guides offer deep dives into bond structures, risk assessment, and portfolio construction.
Who Should Consider CIMO NT 29?
These notes are a smart play for:
- Yield-focused investors wanting above-average income
- Buy-and-hold debt investors targeting 2029 maturity
- Balanced portfolios looking for mid-risk fixed income
However, they may not suit investors looking for ultra-short-term liquidity, speculative equity returns, or extreme rate sensitivity hedging.
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