Company: TWO-PC
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0001465740-25-000152
Chunk: 272

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-10-28
Form: 10-Q
Item: Item 8
Chunk 272
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. The convertible senior notes are due January 2026, paying interest semiannually at a rate of 6.25% per annum on the aggregate principal amount, which was $261.9 million on September 30, 2025.

As of September 30, 2025, the debt-to-equity ratio funding our Agency and non-Agency investment securities, MSR and related servicing advances and mortgage loans held-for-sale, which includes unsecured borrowings under senior notes and convertible senior notes, was 4.8:1.0. Our Agency RMBS, given their liquidity and high credit quality, are eligible for higher levels of leverage, while MSR, with less liquidity and/or more exposure to prepayment risk, utilize lower levels of leverage. Generally, our debt-to-equity ratio is directly correlated to the composition of our portfolio; typically, the higher the percentage of Agency RMBS we hold, the higher our debt-to-equity ratio will be. However, in addition to portfolio mix, our debt-to-equity ratio is a function of many other factors, including the liquidity of our portfolio, the availability and price of our financing, the diversification of our counterparties and their available capacity to finance our assets, and anticipated regulatory developments. We may alter the percentage allocation of our portfolio among our target assets depending on the relative value of the assets that are available to purchase from time to time, including at times when we are deploying proceeds from offerings we conduct. We believe the current degree of leverage within our portfolio helps ensure that we have access to unused borrowing capacity, thus supporting our liquidity and the strength of our balance sheet.

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The following table provides a summary of our borrowings under repurchase agreements (excluding those collateralized by U.S. Treasuries), revolving credit facilities, warehouse lines of credit, term notes payable, senior notes and convertible senior notes and our debt-to-equity ratios for the three months ended September 30, 2025, and the four immediately preceding quarters:

(dollars in thousands)For the Three Months EndedQuarterly AverageEnd of Period BalanceMaximum Balance of Any Month-EndEnd of Period Total Borrowings to Equity RatioEnd of Period Net Long (Short) TBA Cost BasisEnd of Period Net Payable (Receivable) for Unsettled RMBSEnd of Period Economic Debt-to-Equity Ratio (1)September 30, 2025$8,671,136 $8,430,709 $8,525,078 4