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PennyMac Financial Services has raised $850 million in debt in an oversubscribed transaction on Thursday. The California-based mortgage lender and servicer initially planned to issue $650 million.
The new senior notes, guaranteed on an unsecured senior basis, pay 6.875% per annum and mature on May 15, 2032. The proceeds will be used to redeem senior notes due in October 2025, but they will pay a lower interest rate of 5.375%.
“Remaining proceeds will be used for the repayment of borrowings under the company’s secured MSR [mortgage servicing rights] facilities and other secured indebtedness and for other general corporate purposes,” PennyMac said in an 8-K filing with the Securities and Exchange Commission (SEC).
The company expects to close the transaction on May 8. At the end of March, PennyMac had $4 billion in unsecured debt, $1.7 billion in secured term notes and loans, and $5.2 billion in secured revolving bank financing lines. Its debt-to-equity ratio was 3.4 times, slightly lower than its target of 3.5 times.
Like PennyMac, other nonbank mortgage companies are expected to extend their debt profile in the coming years.
Fitch estimates 2025’s maturity wall at $1.5 billion for the remainder of the year, picking up to $2.2 billion in 2026 for nonbank mortgage issuers under its coverage. Companies have “repeatedly demonstrated access to unsecured markets and should be able to refinance at economical terms,” Fitch said.
The list of companies that recently issued debt includes Better Home & Finance Holding Co., Rithm Capital, Planet Financial Group and United Wholesale Mortgage.
