Prodesse bouncing back

Prodesse, which invests in triple-A mortgage-backed securities, had a good third quarter as the markets in which it operates continued to bounce back.Net asset value (NAV) per share at the end of September stood at $8.19, excluding the third quarter dividend, up from $7.69 at the end of June.The third quarter dividend of 28 cents 'equates to an annualised dividend yield of 15.54%', the company said. The company paid a dividend of 27 cents in the second quarter and a divi of 23 cents in the third quarter of 2008.Net income in the third quarter totalled $7.8m, down from $13.5m in the second quarter but up from $7.7m in the corresponding quarter of 2008.The annualised yield on average assets, which is calculated based on the annualised interest income for the period divided by the average value of interest earning assets for the period, was 4.48%, up from 4.33% in the second quarter.The annualised cost of funds on the average repurchase balance was 2.63%, down from 2.68% in the second quarter, and equates to an interest rate spread of 1.85%, down from 1.65% in the second quarter.'While conditions are currently favourable to the fundamentals of Prodesse's strategy, we remain vigilant in monitoring the markets for any changes to those conditions,' said Kris Konrad, managing director and co-head of portfolio management at FIDAC, the investment manager to Prodesse.'In particular, we continue to watch primary mortgage rates and pre-payment speeds, and the trajectory of US government policy as it relates to participation in the Agency MBS market,' Konrad added.