Fitch Ratings expects to rate
Proceeds from the issuance are expected to be used to repay a portion of the company's senior notes due
Key Rating Drivers
The unsecured debt will rank pari passu with PFSI's existing senior unsecured debt, and, therefore, the expected rating is equalized with the company's outstanding senior unsecured debt and Long-Term Issuer Default Rating (IDR). The equalization reflects average recovery prospects under a stress scenario given the availability of unencumbered assets.
Fitch does not expect the debt issuance to have a meaningful impact on the company's leverage profile as proceeds are expected to refinance upcoming unsecured debt maturities. PFSI's total leverage, calculated as debt to tangible equity, was 3.4x at 1Q25, compared with 3.8x at YE24. Corporate leverage, excluding funding facilities, was 1.5x and 1.4x at 1Q25 and YE24, respectively.
PFSI's ratings are supported by its solid and growing franchise and historical track record in the
The ratings are constrained by the highly cyclical nature of the mortgage origination business, elevated exposure to
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Gross leverage sustained above 5.0x;
Corporate leverage sustained above 1.5x;
Sustained profitability challenges that erode tangible equity and the company's market position;
A decrease in aggregate liquidity resources or reduction in unencumbered assets that constrain the company's funding flexibility and/or increased utilization of secured funding that reduces the unsecured funding mix below 15% on a sustained basis;
Regulatory scrutiny resulting in PFSI incurring substantial fines that negatively impact its franchise or operating performance.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Improvement in the funding profile including an extension of funding duration, an increase in the committed funding percentage and the maintenance of unsecured debt above 35% of total debt;
Leverage maintained at or below 3.0x and corporate leverage maintained at or below 1.0x;
Growth of the business that enhances the franchise and platform scale;
Improved earnings consistency;
Stronger liquidity profile, as evidenced by a meaningful increase in the percentage of available liquidity resources (cash and available borrowing capacity) to total debt.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
The senior unsecured debt is equalized with PFSI's Long-Term IDR, reflecting the funding mix and average recovery prospects in a stressed scenario.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The unsecured debt rating is primarily sensitive to changes in PFSI's Long-Term IDR and would be expected to move in tandem. However, a meaningful increase in the proportion of secured debt could result in the unsecured debt being notched down from the IDR.
ADJUSTMENTS
Fitch has assigned PFSI's Standalone Credit Profile (SCP) in line with its implied SCP.
The Business Profile score has been assigned below the implied score due to the following adjustment reason: Business Model (negative).
The Earnings and Profitability score has been assigned below the implied score due to the following adjustment reason: Earnings stability (negative).
The Capitalization and Leverage score has been assigned below the implied score due to the following adjustment reason: Profitability, payouts and growth (negative).
The Funding, Liquidity & Coverage has been assigned below the implied score due to the following adjustment reason: Funding flexibility (negative).
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
PFSI has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy and Data Security due to its exposure to compliance risks that include fair lending practices, debt collection practices and consumer data protection, which have a negative impact on the credit profile and are relevant to the rating in conjunction with other factors.
PFSI has an ESG Relevance Score of '4' for Governance Structure due to board effectiveness as it relates to protection of creditor and shareholder rights and related party transactions among PMT, its externally managed REIT, and other affiliates. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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