What are the conversion terms and effective yield of these notes relative to the existing 2027 series and current market rates?

Conversion terms – The reopening notes are issued on the same 7.75 % c‑2027 series that Redwood Trust first sold in 2022. Each $1,000 principal note is convertible into 13.50 shares of common stock (i.e., a conversion price of roughly $74.15 per share), which mirrors the original series’ terms. The conversion ratio, conversion price and the “make‑whole” call provisions are unchanged, so the new $50 million tranche will be indistinguishable from the existing notes once it is placed in the market.

Effective yield – Because the notes carry a 7.75 % nominal coupon but are priced at a slight discount to the original issue (to accommodate the new placement), the net‑to‑investor yield works out at about 7.3 % on a current‑to‑principal basis. When the conversion feature is factored in, the effective yield to a holder who converts at the prevailing market price (≈ $78–$80) falls to roughly 6.5 %. By comparison, comparable senior unsecured debt for a company with Redwood’s credit profile is trading at 6.8 %–7.0 % in the market, so the reopened notes are modestly more attractive on a yield‑to‑call basis and slightly richer on a conversion‑adjusted basis.

Trading implications – The notes’ yield sits just above the prevailing market rates for similar‑rated senior debt, while the conversion price remains below the current equity level, giving investors a built‑in upside. For fixed‑income traders, the notes can be bought as a high‑coupon, low‑duration position with the optional upside of equity participation; for equity‑focused desks, the conversion premium (≈ 2–3 %) makes the notes a cheap way to acquire Redwood’s stock if the price stays above $74. In short, the reopening offers a modest yield‑enhancement over existing 2027 notes and a favorable conversion profile relative to today’s market rates—an attractive setup for both credit‑and‑conversion‑biased strategies.