Q2 2023 PennyMac Financial Services Inc Earnings Call - Q&A
Good afternoon, and welcome to the Pennymac Financial Services, Inc. Second quarter 2023 earnings life earnings Q&A session.
Additional R&D materials are available on Pennymac Financial's website at <unk> P. M. S. I thought opinion Mac dot com.
Before we begin let me remind you that this Q&A session may contain forward looking statements that are subject to certain risks and identified on slide two of the earnings presentation that you could use that you could cause the company's actual results to differ materially as.
As well as non-GAAP measures have been reconciled to their GAAP equivalent.
Earnings materials.
I would like to remind everyone. We will only take questions related to opinion make financial services, Inc, or a P O S I D.
The live Q&A session for opinion back mortgage investment trusts or PMT will begin on our webcast at 545 P M Eastern time.
For additional materials related to Pmt's earnings and live Q&A session. Please visit P. M T dot dot.
Dot com.
We also ask that you. Please keep your questions limited to one preliminary question.
Follow up question and we'd like to ensure that we answer as many questions as possible.
If you'd like to ask a question. During this time simply press star followed by the number one I get telephone keypad and if you'd like to withdraw your question again star one.
Now I'd like to introduce David Spector, Pennymac, Financial's, Chairman and Chief Executive Officer, and Dan Karate, Pennymac Financial's Chief Financial Officer.
Thank you operator, I'd like to welcome everybody to Pennymac Financial's first slide earnings Q&A session.
As you all know historically, we've not done a librarian's call, but we believe strongly in the continued evolution of our strong and accessible investor relations team.
We believe that now is the appropriate time to introduce this live call.
We believe these Q&A sessions will give stakeholders increased transparency into our business in a timely manner and although we are introducing a live call. You can rest assure that we will maintain our strong ongoing commitment to investors and analysts via conferences non deal roadshows and other industry events.
Now I'd like to begin taking questions operator.
Okay.
Yeah.
As a reminder, if you'd like to ask a question simply press star followed by the number one anchor telephone keypad.
Well now take your first question.
And your first question is from the line of Kevin Baker with Piper Sandler.
Great. Thank you.
Carl I think it's.
It's important to have this disclosure with everybody.
I wanted to address on page seven of the presentation and you make the guidance or the <unk> or are we is projected to trend towards the pre COVID-19 range.
Four during 2023 could you just maybe add a little more color around that on what your definition is of the pre COVID-19 range.
And then when you say trend towards is that mean a tenet.
Or get close to that level and potentially a reach it in 2024. Thank you.
Yes, So look hi, Kevin how are you doing.
Look I think thats.
As we know pre Covid, we ran an ROE.
Just slight slightly under 20%, 19% with the two COVID-19 years and since then.
We've been in single digits.
Brian to put an exact time of when we're going to get.
To a certain point is is not what we're trying to address here. What we're saying is that we believe that we bottomed out.
In the prior quarter and last quarter, we were.
4% Roe.
This quarter, we are at a 7% ROE and we see <unk> continuing to move up a lot of that most of it has to do with the fact that the.
Question is what's going to happen with mortgage.
We spent a lot of time over the last year.
Buying a lot of high no rate loans do corresponded to support the consumer direct channel is when rates decline that will provide refinance opportunities but.
The question is when do when do rates start moving down.
We're in excellent position to seize on that but there's also I think growth opportunities that we see our production channels, particularly in correspondent and in brokerage.
So I think I think it is.
A lot of positive feeling here in terms of the the acceleration of the <unk>.
And when I think is the C is the unknown.
Okay, just a follow up on that do you think it's attainable.
To return back to pre Covid levels.
If rates were to remain near current levels.
I say that because.
Theres potential where we could have.
Yield curve steepen or if the fed starts to drop rates and the long end stays elevated for extended period of time, and we could have mortgage rates.
Our range here, obviously there is.
A lot more in mortgages being produced at a higher rate.
But do you feel like lower rates are required to get back to that pre COVID-19 range.
Hey, Kevin. This is this is Dan so I think that.
Rates declining would be an accelerant to getting back up higher into into pre COVID-19 range.
But I think your point is a good one and certainly in line with our.
With our strategy here, where we're adding significant amounts of higher note rate loans as we as we move forward in time.
We've built that up to about.
In terms of loans with note rates above 5% comprises about 15% of our servicing portfolio at the end of Q2, and so as we continue to do that that puts more and more of those loans into play for refinance you can say something similar about the industry generally Aldo.
Everyone is adding at that at that same clip.
But that opportunity sort of grows just if there is regular interest rate volatility to drive some amount of refinance volume increasing amount of refinance volume. So while rates declining is would be sort of accelerant to moving our Roe.
Backup corridor or pre.
Pre COVID-19 levels or pre Covid range.
Which really to remind folks the bottom of our pre COVID-19 range was 11%, so effectively getting back up into double digits.
But it's not it's not necessary would probably just take a little bit longer to the extent that rates stayed higher for an extended period of time.
Yeah.
Okay. Thank you. Thank you Dan. Thank you there thanks.
Thanks, Kevin.
Your next question is from the line of Michael Kaye with Wells Fargo.
Hi.
You had a very strong pickup in production margins this quarter.
Could you just talk about I mean, do you think that sticking and was there any sort of one time dynamics and Eric we can we continue to see the momentum into Q3.
I think I think that.
The margin story it was a really good one.
The second quarter.
We are seeing.
A continuation of that in this months.
Hey.
We are seeing in the broker side, we're seeing pricing holding in where where it was in the second quarter, we're seeing a return to the rational pricing that we expected.
Similarly in the consumer direct channel.
We're seeing good margins, there and I think that Thats that gives us a lot of.
Lot of.
Strong strong belief that we will continue to see it on the correspondence.
<unk> seen margins come back in the correspondent in a nice way.
No.
In the second quarter in PFS sign in the correspondent sector. We saw margins go from 25 basis points to 33 basis points, and we're continuing to see them holding nicely.
For our correspondent as well so.
I would like the margin story, so I think that I think theres, a little bit more room on the in correspondent.
Especially as you see with the banking regulations that have come out on the Sars are being treated I suspect that will continue to see some more some.
Some good margin opportunity for margin decrease opportunity and correspondingly specially.
Okay.
Glad to hear.
A lot of talk with the fact that consumer direct segment.
It has high note rate MSR as poor weather events, when we do get a ramp that but in the meantime is there any.
Initiatives in the consumer direct channel to try to gain a foothold in a purchase market as we wait for the <unk> two will eventually rebound.
Look we've we have a really.
I think a really good product introduction that we introduced about a year ago and closed end seconds.
Where we're seeing an increasing amount of course of closed end second originations.
Worrying about the model for a run rate of about $50 million to $60 million a month.
<unk>.
At profitable levels, and what that's allowing us to do is a few things number one it's allowing us to offer our current existing.
Servicing customers the ability to take cash out of their properties.
So keeping them from doing cash out refinances, which I just I can't I can't.
See why anyone with a low note rate first which is.
Which is a lot of our portfolio refi ing out of their low rate first just to take out cash and so having a fixed rate second product is really important and it's been it's.
<unk> been really powerful the other thing about the fixed rate second program is it's allowing us to keep capacity in place and that capacity can can then as rates decline offer rate and term refinances. In addition to cash out refinances in addition to <unk>.
So it's very much.
Allowed us to keep capacity in place such that when rates decline. We can we can pivot over and we we do have some.
Earlier in the year, we had a brief period when rates got low and we were able to we were able to pivot to take advantage of that opportunity. So the closed end second product is a good one and I think and I think the likelihood the closed end second product as you can have first lien rates decline, but still demand for closed end seconds.
Even given the sheer number of low interest rates first that we have in the portfolio. So that's that's been a really a really great product for us.
I also think that given the banking regulations that were just announced this morning, and we got a brief review of them I think there's going to be an opportunity for returns of some securitization.
<unk>.
There's going to be a lot a lot of discussion and changes that I think potentially could take place, but suffice it to say I think given given what's happened with the regional banks last quarter. Given these banking regulations, there is going to be a need for non bank capital to support.
Jumbo loan originations in particular, and so I'm encouraged by that as well we are a jumbo product out.
And all three channels that I think is going to it's going to as I think it would be very valuable to us as things settle down here.
Okay. Thank you.
Your next question is from the line of Doug Harter Credit Suisse.
Yeah.
Thanks Hakan.
You could talk a little bit more about.
<unk> strategy and some of the comments that kind.
Kind of the cost in July .
It has come down but just.
How are you thinking about hedging the portfolio differently given the yield curve.
Kind of given how far out of the money.
What percent of your servicing portfolio is.
Yes, So look I think I think we have historically from the day. We started this company we have hedged our servicing portfolio and I think we have a <unk>.
Have a tremendous track record in doing so.
I think that we have now we've seen over the last year or a really unique environment, where we've gone from a pretty steep yield curve to an inverted yield curve and we've seen a lot of volatility in the market. What that's meant is that the cost to hedge has gone up to levels that we have not yet.
We have not seen.
And so.
And the process, we've had to really look at our hedging program and ask ourselves what how do we want to think about what it is we're hedging and what are we hedging for so historically, we've had a bias to rising rates and that bias towards raising rates has been primarily because as rates as rates increase.
Loans in the pipeline, we have to close out we have infrastructure that we need to right size and theres a cost to that given the levels. We're at today and given the levels of activity that need is nowhere near what it was two years ago and so the need to have gains in a sell off.
Largely largely dissipated similarly, when we look at our rally profile, we have a lot as Dan pointed out we have a lot of high rate loans that in a rally we believe that we can seize on the refinance opportunity faster than anybody and that means we would have prop.
Profitability in that rally so that allows us to open up a little bit more exposure in a row.
So.
So in looking at that combined with the fact that volatility was at historic highs, we set ourselves okay, we need to adjust our hedge for that so that that cut down the hedge costs down tremendously.
From from call it the beginning of April .
Beginning of June and in June and July we I'm really I'm really happy with what I'm seeing in terms of the hedge costs associated with hedging the portfolio the performance of the hedge as well as.
Is it is it is it providing what we need is what we needed to provide for us.
And so I think I think we're going to we're going to continue to see.
Those levels, maintaining low volatility to buy to put on the hedges were pretty much at an all time high they were at an all time high of one point, even higher than when Covid hit.
At one point in the second quarter so.
It speaks to the nimbleness of.
And Dan and the team to be able to adjust accordingly and.
React to those high hedge costs.
I guess.
Listen to the lower hedge costs is there any.
Capital or liquidity.
Read up on kind of renew.
Hedging.
No strategy or do you have in place.
Not.
Not in particular, freeing up capital or liquidity, we do have a really significant amounts of liquidity at this point.
Uh huh.
And one $5 billion of cash on the balance sheet, we have the ability to draw down.
Significant amounts more from our secured financing option.
Up to nearly $3 billion.
He came so this doesn't really change significantly or.
Our liquidity probe or the hedging change doesn't really significantly changed our liquidity profile and similarly really similarly on the capital side.
So that wasn't necessarily the primary focus of those changes it was really more around.
Constrained some of the cost while still keeping a prudent hedge sensitivity profile.
Allowing for essentially as David said, not not as great a gains in a sell off.
And still keeping limitations on the exposure that we could see a rally in terms of the net change on the MSR.
Great I appreciate it thank you.
Your next question is from the line of bus joint like K BW.
Hey, guys good afternoon.
Just wanted to ask about the bulk market.
Obviously, historically you haven't done much there, but it seems like returns R. R V.
Pretty attractive so just curious if you have any possibility of dipping a toe in there.
Yes, so I'm going to I'll, let Dan go into into what we're seeing in particular in the bulk market, but generally speaking when we think about investing and servicing bodes investing to correspondent is at the top of our list.
What is what is our economic best execution.
Number one we.
We can go through all the diligence of the loans. We can review the loans, we know the Counterparties and we can we can pricing corresponded to create that servicing portfolio that we want to own and then <unk>.
Really when we create the MSR theres, a theres a tax benefit that makes owning <unk> much more economically attractive to us and all of the known and bulk MSR.
Having said that we do look at we do look at all of the bulk MSR packages that come out.
Look I think I think there's a lot there's a lot of discussion about the yields in the bulk MSR market that are being thrown around.
Our I think that we're not going to be the counterparty risk the price of bulk MSR with the longest higher for longer.
<unk>.
Scenario.
We were not going to priced bulk MSR is just on a marginal basis.
We look at the bulk MSR market, we do see some attractive packages and in PMT by the way we bought a small package.
Last month.
This month, I should say and so we do.
In the meat and met the PMT required returns and so on.
Generally.
That debt.
There will be more bulk MSR is coming out and we will be looking at packages and we will we will opportunistically.
If the opportunity arises we will we will purchase such a package.
Right.
Yes in terms of in terms of the returns.
That we see on the MSR packages I think.
We don't see it I think in the exact same way as others.
Really more probably on the conventional side closer to high single digits.
And.
As David sort of alluded to that may be related to what what's the expectation for rates that are built into those assumptions.
Because there's a lot of other assumptions that are that can drive what you estimate the returns to be overtime.
But.
As David said.
They can be attractive in some cases, we did.
Yes.
For PMT purchase a small bulk MSR portfolio.
On the conventional side on the government side.
Availability of those packages has been or the flow of those packages has been significantly lower.
And we haven't seen any.
Any opportunities that really we thought it made sense to hit on.
We'll continue to evaluate them, but really as David said, we think there are a lot more advantages to deploying our capital by investing in.
Into that correspond to MSR via the correspondent channel and higher note rates, where we have control around the specific loans that we're bringing on.
As opposed to via bulk packages.
Okay, Great. That's very helpful. Thanks, and then just wanted to go back to the bank regulatory stuff again, I mean, you noted that it could bring back the nonbank securitization ditmas specifically on just on the MSR side I mean, do you feel like that could trigger more activity. It looks like I guess more banks will have a restriction.
I can hit that 10% sooner as well, so I think a bigger pool of banks there.
I do I do I think that.
I think it's I think it's going to create opportunity.
For banks that want to sell on the Sars.
I think that.
It's going to it's going to attract a flip side of it will track probably some more capitals of space, which is which is which is not the worst thing.
But I think that it's there's a lot of there's a lot of questions that really really need to see to.
The answer.
And look it could have it could abbott's effect also in the correspondent space because remember that there are that there are bank core strength on correspondent Bank correspondent Division.
That.
<unk> ended up there in that business basically to owned servicing.
So that that that could that could help in.
In correspondent and Thats, why Im generally bullish, but I think in the long run margins will.
On their way up and correspondent.
Okay, great. Thanks, a lot.
Yeah.
Your next question is from the line of Henry Coffey with Wedbush Securities.
Yes, good afternoon, and thanks for taking my call.
Just looking through the deck and.
The uptick and tfsa correspondent.
I assume lots of Thats Ginnie Mae related government products.
Is that more.
We'll call it.
The cyclical and tied or or just tied to the housing.
They've put it comes in the summer or is that reflect.
Gains in market share on your part into the correspondent business.
Okay. Thanks.
I think the core.
Corresponding store in the second quarter is a really interesting one and theres a lot that went on there.
First off we we moved a lot of the or the bulk business that we have been purchasing in PMT PMT sold those loans to PFS Si wafer PMT to further diversify its investments between MSR and credit related.
Credit related investments.
And so we saw more of that business move over to PFS side. So we saw more conventional business come into correspondence.
Having said that the the.
The increase in correspondent quarter over quarter was about 5%.
And I think that there is there is a lot of there's a lot going on behind that number first of all with the regional bank crisis in the first quarter, we saw Banco correspond divisions.
<unk> really pulled back from the market. So we have a really big Q1, and so in Q2, we saw them come back, which I think broad.
It back more in line to what to what.
So the pace that we've been running before the regional bank crisis really really.
In addition in corresponding Q2 on the conventional side, we saw the GSC implement pricing changes.
<unk> debt.
Fell to me that they werent necessarily given to everybody.
And in the <unk>.
In the process it had some adverse impact on results, we've begun to see those ease up.
In July and we're starting to see that and the pace of activity on the conventional side.
And then on the government side look we as you all know we have this we have a very well publicly stated strategy of using correspond in particular to deploy capital to buy high rate loans too.
To preserve the opportunity for our consumer direct channel to refi those loans when rates decline.
The trend in the government market has been to retain larger servicing strips, which corresponds to a higher investment in the servicing.
And that kind of reduces the effect that the refinance provides low level in terms of a return.
And so we began to look at some of the some of these pricing strategies that others were implementing in the market.
And so we kind of took down our share a little bit on the high servicing strips.
But we're seeing that kind of also returned to normalized levels in July and so.
So I think it's I think look I think it validates and shows how this management team thinks about running these businesses and while we've two years ago had some stated market share goals for correspondent broker consumer direct and servicing the big one was 20, plus and Thats the Roe.
We're trying to guide this company too and Thats something that will always will always be at the top of my list.
<unk>.
Issues in both.
Sure as important it provides scale it provides pricing power. It provides halo effects in the multichannel strategy between correspondent and retail and broker.
We're going to we're going to have quarters like we had a correspondent where we have some anomalies come up with a similar one in broker last year, when we had irrational pricing and we kind of stepped aside so.
I'm generally pleased with the production segment.
Returns this quarter and looking our broker direct channel, we were up 37% and our consumer direct channel we were up 47%. So we're we're the number three broker direct originator now so I'm really pleased with what came out of our production segment.
With the pricing that you talked about with the Gse's was that favorable to large independent originators like yourself or was that more of a pricing penalty.
Okay.
Look I don't I don't nor can I really go into the GSC the specific pricing change.
Changes that they've put in suffice it to say I don't take an advantage to us I know it didn't.
But I think I think the more the more.
More I would say frustrating part was the fact that they didn't provide pipeline protection. They just implemented immediately so any loans that we are waiting to ship.
Any loans that we've given out interest rate lock commitments too were affected by it and we changed our pricing methodologies. So the borrower as to sort of bear that option costs now, but that's that's kind of what what the pricing changes are that I'm referring to.
Great well. Thank you very much for taking my question and holding this call.
Thank you Henry and nice hearing your voice.
Your next question is from the line of Kyle Joseph with Jefferies.
Okay.
Hey, good afternoon, guys. Thanks for taking my questions is higher than on an after apologies. If this has been asked but just and I think he touched on it briefly on Hunter's question, but just.
And in terms of the broker I know you guys have definitely moved up to number three there, but kind of outlook for margins, obviously, they recover together in this quarter, but.
Going forward as a good run rate or is there potentially some more upside there.
Look I like I like.
No.
We always want more margin.
And I'm always trying to convince Doug and the team to get margins up but look we we had we had really good margins last quarter, but in the mid Eighty's I think theres, a little bit of room there.
Smidge.
But I don't.
I think we're in a really good level there.
I think that it's giving us the opportunity to increase the number of brokers that we're dealing with provide a strong number two alternative to those who sell to the top two <unk>.
Poker originators.
And.
We're making really good really good progress.
In terms of the tools that we're deploying into into broker.
Got it that's it for me thanks for answering my questions. Thank you.
Your next question is from the line of Eric Hagen with D. T I D.
Hey, Thanks, how are you doing guys.
Got a couple of questions here as the MSR portfolio, maybe continues to grow how much room do you have to borrow more on your MSR lines. How do you think about maybe using a secured leverage versus possibly coming back into the market with unsecured debt.
Finance portfolio as credit spreads continue to tighten.
Sure.
Sure.
So we've got a pretty significant amount of.
A borrowing capacity versus versus our MSR.
Sure.
Yes.
On page 22 of the of the deck.
You can see our secured.
Bank financing lines for MSR, we have about $3 billion, we only have $400 million drawn so we have.
A fair amount of capacity they're more than.
That allows for some room for growth and some room for appreciation if interest rates were to go up further as well in terms of how we're thinking about.
Going forward and.
Financing our balance sheet our preference.
<unk> generally is to move toward more unsecured more unsecured debt over time, I think that would be supportive of.
So the ratings profile.
And sort of lead to death.
Our financing cost on the unsecured side and Theyre also benefits in terms of.
Reduction of any exposure to margin calls because although we do have term debt for.
The MSR is a lot of that is based on the total collateral base and can require margin calls our hedging program helps to insulate against that but we do believe that unsecured at over time would be preferable.
<unk>, we're continuing to.
Look for opportunities, where we might enter enter into the unsecured debt space again.
But really in some sense also depends on the.
The differential between funding cost of the secured debt in the unsecured debt and.
We have seen in recent periods there be fairly.
Fairly attractive pricing in terms of some of the secured debt we have issued secured term loans.
In <unk> it was really in Q1.
An attractive spread 300 over sofa.
I think that the depth of that market is somewhat limited.
So, but continuing to look at what the balances between being able to issue that unsecured debt and what an attractive entry point might be in the current market versus where we can finance.
On a secured basis. So look I think I think we've done a really nice job in in plumbing out different avenues for us to raise debt.
When you look at the the term loan debt that we've issued we have our BSN structure that we have with wall Street banks that you can issue term notes off.
We've issued almost $2 billion of unsecured debt kind of laid the groundwork for us to issue more unsecured debt and so I really I think that we're going to and we're going to try to keep all avenues available to us, but I think to Dan's point, the unsecured debt rating.
Some really good effects for us as we think about ratings and we think about liquidity and driving down those costs and so I think.
So we'll continue to look to access all of those markets.
That's really helpful. Thank you guys for that.
I think just one more for me I know were trying to wind down here, but lots of discussion around loan modifications, even the structure for FHA loan mods and how effective those can be at higher interest rates.
How many loan mods are you guys doing right now.
What kinds of things and maybe looking forward to control the credit risk and the FHA portfolio, even even though the health of the consumer.
On many levels looks relatively good and strong right now. Thank you guys, Hey look I think I think I think the FHA has done a tremendous job.
<unk>.
And the loan and the loan modification programs that they do offer we're seeing an uptick in the 40 year program.
And I think that.
That's only going to grow.
As a way to extend out the term.
B alone, but look our portfolio.
Our delinquency numbers are really strong.
And I think that thats something that well.
We're watching like a hawk like everybody assumed servicing but I think that that's that's really one of the best but really one of the best stories about about the investment in the servicing they were yes.
There is an ever so slight increase but still well below what we've historically.
Historically seen in servicing advance balances were down.
As well and so I just think that we are we are setup that if there is a turn in the economy or the market. We do see delinquencies increase we have the capacity in place in our servicing division to be able to meet the customers' needs. More importantly, we have the technology in place to be able to meet the demand if you recall.
During Covid, we had a tremendous.
Usage of our of our web site and using of electronics.
Provide forbearance is and that's something that we will continue to.
No.
Sure.
We're enjoying the performance now, but we're also prepared for whatever comes our way.
Really helpful. Thank you guys very much.
Your next question is from the line of Trevor Cranston with JMP JMP Securities.
No.
Alright. Thanks.
My questions have been addressed but.
Maybe just one quick one on the consumer direct margins.
You noted I think a lot of the improvement this quarter was from <unk>.
A lower mix of streamlined refis.
Can you comment generally sort of if you've seen any organic improvement in consumer direct margins in sort of the trends youre seeing within that channel. Thanks.
Look you're right we were.
Did we did.
As I said in the first quarter, we had a period of time where rates Scott low we were very efficient.
On a streamlined refis and for those of you saw at our prepayments speeds came in higher than the rest of the market and so.
We put some.
We put some controls in place.
To make sure that.
We deal with the issue now, which we have been and are starting to see a normalization of those prepayments speeds.
And look the interesting part of that is as you can see from the increase in the margin we're willing to work for a little less margin that global at less cost to originate.
But if we've been able to continue that we could have kept capacity in place.
But suffice it to say I think I think that.
We we we value too.
The Ginnie Securities and we want to be very careful that we don't do anything to put that at risk.
Look I think it's I think in the process, we've been able to as I said being able to increase our penetration of the portfolio and closed end seconds and thats been very advantageous and I think we're starting to see look we have a team that's focused.
On new customer acquisition, and I think that they are they are starting to starting to see some green shoots there.
Our purchase percentage was up was up a little bit last quarter.
I continue to see that growing and so it's yes.
There is I wouldn't I wouldn't just say, okay. It's just a rate and term opportunities consumer direct it's a lot more than that and Thats and I think that we have we are we have a great team in place that's focused on all of those channels.
I think we will continue to see the upward progression of their hard work and effort.
Got it okay I appreciate the comments thank you.
Your next question is from the line of Courtney <unk> Barclays.
Hi, David Hi, Dan. Thanks for the question just a really quick one from me with regards to leverage now you guys are on the lower end of the spectrum about a one two times non funding debt to equity how should we think about the leverage targets longer term and the opportunity for bond buybacks and where that kind of sits in.
Capital allocation priorities. Thanks.
Sure so yeah.
Yes.
As you mentioned in terms of the non funding debt at one two times.
Which is within the range that we've typically targeted.
Yes, typically been around one times are a little bit over one times in in recent periods.
We would expect to be in a similar vicinity potentially.
Potentially increasing a little bit, but really we would expect to be around the vicinity.
The vicinity that we have been historically or the vicinity that we're that we're currently at.
That's.
Roughly what the level that we're targeting with.
With respect to bond buybacks.
Something that we've looked at from time to time in terms of allocating capital to it we do see those.
Long term.
Alright.
Long term unsecured debt.
As I had been talking about it.
Thing that we want to continue sort of adding to it seems sort of.
Counterintuitive there to to retire it.
And so it's not something that's high on our on our capital priority list that being said as we're moving through time, if there are certain.
Certain opportunities that really present themselves, it's something that we would consider but not.
Not something that's high on the on the on the list of capital priorities for Us.
Understood. Thank you so much that's helpful.
Yes.
Okay.
Okay perfect.
Because I don't like cutting things short, but we have our PMT call beginning in five minutes, so I would like to.
Thank you everybody for joining us in this introductory call.
Cause I was really helpful and it was good and I. Appreciate you taking the time to join in if you have any questions. Please don't hesitate to reach out to us.
And I look forward to speaking with all of you sometime in the near future. Thanks again.
Thank you for joining you may now disconnect your lines.
<unk>, please don't hesitate to reach out to us.
And.