Redwood Trust priced a $100 million senior notes offering due 2030, carrying a 9.50% coupon. The deal includes a 30‑day option for underwriters to purchase an additional $15 million, with the transaction expected to close on November 19, 2025.
The financing aligns with Redwood’s capital‑light strategy, providing liquidity to fund its core mortgage‑banking platforms—Sequoia, Aspire, and CoreVest—and to acquire assets for its Redwood Investments portfolio. The proceeds also support strategic acquisitions and broader investment initiatives.
Redwood’s balance sheet shows a high debt‑to‑equity ratio of 21.05 but a strong current ratio of 7.14, indicating robust short‑term liquidity. The company’s dividend yield of nearly 14% is maintained, yet the negative dividend payout ratio signals that earnings are insufficient to cover the dividend. The new debt therefore serves to sustain shareholder returns while the company refocuses on core operations.
Management highlighted the strategic shift. CEO Christopher Abate said the company is accelerating its transition to a scalable operating model, while CFO Brooke Carillo noted that core‑segment earnings available for distribution rose to $27 million, a 17% return on equity. President Dashiell Robinson reported record loan origination volumes across the three platforms, underscoring the growth potential that the new capital will support.
The 9.50% coupon reflects the market environment for high‑yield corporate debt in 2025, and the 30‑day option gives Redwood flexibility to raise additional capital if demand is strong. The ability to redeem the notes at 100% after 2027 and at 101% upon a change of control provides a safety net for investors and aligns with Redwood’s long‑term capital structure strategy.
Overall, the senior notes issuance is a material financing event that strengthens Redwood’s liquidity, supports its strategic pivot away from legacy assets, and positions the company to accelerate growth in its core mortgage‑banking businesses.
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