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In a solid debt market for mortgage companies, PennyMac Financial Services announced on Thursday the issuance of $650 million in debt maturing in 2032, primarily to facilitate the redemption of notes that are due in October.
“Proceeds from the offering, together with cash on hand, will be used for the redemption of the Company’s 5.375% senior notes due October 2025,” PennyMac said in an 8-K filing with the Securities and Exchange Commission (SEC). “Any remaining proceeds will be used for other general corporate purposes.”
The notes will be offered in a private placement to qualified institutional buyers and will be “fully and unconditionally guaranteed on an unsecured senior basis.” Typically, unsecured senior notes feature lower fixed interest rates. This offering is contingent upon market conditions and other factors.
At the end of March, Pennymac’s debt-to-equity ratio was 3.4 times, slightly lower than its target of 3.5 times. The company 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. Total liquidity, including cash and available borrowings with pledged collateral, stood at $4 billion as of March 31.
PennyMac’s move highlights an active debt market for mortgage companies currently navigating a challenging macroeconomic landscape.
According to credit rating agency Fitch, issuance activity was frozen due to interest rate increases between the second quarter of 2022 and the third quarter of 2023. However, Fitch reported on Wednesday that in 2024 and 2025, “despite origination volume headwinds, funding market access by issuers has been solid.”
Fitch estimates that non-bank mortgage companies covered by its analysis have issued approximately $8.5 billion over the past couple of years, with $5.9 billion in 2024 and $500 million year-to-date in 2025.
“The 2025 maturity wall has been largely addressed, with $1.5 billion remaining for the year. Maturities pick up in 2026, with $2.2 billion coming due, but the affected issuers have repeatedly demonstrated access to unsecured markets and should be able to refinance at economical terms,” Fitch said.
For example, in April, Better Home & Finance Holding Co. — the parent of digital mortgage lender Better.com — restructured about $534 million of its outstanding debt with SB Northstar, SoftBank‘s asset management subsidiary.
In March, Rithm Capital, the parent company of multichannel lender Newrez, announced closing the largest-ever mortgage servicing rights (MSR) debt issuance, totaling $878 million.
Additionally, in December, Planet Financial Group raised $475 million in an oversubscribed transaction and United Wholesale Mortgage (UWM) placed $800 million in the market – 60% more than it had previously expected.
