Rocket Companies and PennyMac Mortgage Investment Trust priced new debt issuances this week. While Rocket is refinancing debt tied to its Mr. Cooper acquisition, PennyMac is supporting its investment and lending strategies.
Rocket priced $4 billion in senior unsecured notes — $2 billion due in 2030 at 6.125% and $2 billion due in 2033 at 6.375%. The proceeds will primarily redeem the notes of a Mr. Cooper subsidiary, Nationstar Mortgage Holdings, that mature between 2026 and 2028.
Fitch Ratings assigned the notes a BBB- rating. It noted the upstream guarantee from Rocket Mortgage and said the issuance will not have a meaningful impact on the consolidated company’s leverage profile, since proceeds are ultimately expected to refinance outstanding unsecured debt.
“Fitch estimates Rocket’s gross corporate leverage (excluding funding facilities), pro forma for the Mr. Cooper acquisition, to be 1.5x at 1Q25,” Fitch explained.
Rocket disclosed its proposed $1.75 billion acquisition of Redfin and $9.4 billion deal for Mr. Cooper in March. The debt offering is expected to close on June 20.
BTIG analysts Eric Hagen and Jake Katsikas said Rocket is leveraging “relatively stable credit spreads.”
“In the near-term, the cashflow coverage for bondholders still looks very comfortable to us, especially with further cost reductions expected to be featured in 2Q earnings reports for RKT and the major servicers, even if headline servicing revenue is flattish and origination volume is flat to down,” they wrote.
Meanwhile, PennyMac priced $100 million in senior notes due in 2030 at 9%, with an additional $15 million option for investors. The offering is set to close June 10.
Proceeds will go toward investing in subordinated private-label securitization (PLS) bonds, acquiring mortgage servicing rights (MSRs), funding correspondent lending and retiring part of its 5.5% exchangeable notes due in 2026.
Analysts at Keefe, Bruyette & Woods, who hosted a fireside chat with the management team, said PennyMac is currently executing one non-owner-occupied securitization per month and expects to complete one jumbo deal per quarter beginning in the second quarter of 2025, each ranging in size from $300 million to $500 million.
Executives said 58% of the PennyMac’s capital is allocated to interest rate-sensitive strategies, with a “comfortable” 45% position in MSRs.
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