Muddy Waters goes short Blackstone Mortgage on loan book deterioration

Carson Block’s Muddy Waters announced a short position Blackstone Mortgage Trust (BXMT), saying interest rate swaps and “manipulated” risk ratings / loss provisions have obscured the “serious deterioration” in the company’s loan book. Muddy Waters believes that starting in 2024, as an estimated $16B of swaps terminate, Blackstone Mortgage will likely significantly cut its dividend as soon, creating risk of a liquidity crisis. The company could have a liquidity crisis due to its lenders requiring it to post more collateral and / or having to fund its unfunded commitments of $2.7B with only $1.5B in committed or identified financings for those commitments, Muddy Waters wrote in a report posted on its website. Shares of Blackstone Mortgage are down 6% to $21.11 following the short report.