While it's not yet clear how much help the Federal Reserve's $200 billion liquidity injection will give the entire credit market, at least Thornburg Mortgage can breathe a sigh of relief.
The "jumbo" lender's shares collapsed after liquidity dried up and margin calls forced it to sell some assets at fire-sale prices. Following the Fed's liquidity injection, Bear Stearns today upgraded the company to peer perform from underperform.
Bear's David Hochstim said in a note that, "The Federal Reserve's Term Securities Lending Facility (TSLF) should provide a significant benefit to Thornburg as liquidity is restored to the non-Agency mortgage market (along with the Agency mortgage market). High quality non-Agency mortgage securities appear to have benefited even more from the Fed's actions than other types of assets because liquidity had been so restricted despite a lack of concern about credit."
He says the Fed's decision to extend lending against mortgage securities for 28 days rather than overnight "appears to be dramatically improving the liquidity and valuation of these mortgage securities."
As of noon, Thornburg shares had jumped more than 110 percent to around $3.28.