Mr. Cooper subsidiary to issue $1B in debt

Mr. Cooper Group announced Tuesday that its subsidiary, Nationstar Mortgage Holdings Inc., is issuing $1 billion in senior notes. The resources are expected to repay a portion of the current balance of its mortgage servicing rights (MSR) facilities. 

Other mortgage companies have raised debt over the past six months, including Freedom Mortgage, PennyMac Mortgage Investment Trust and Pennymac Financial Services. Analysts believe other companies may follow suit. 

Mr. Cooper’s senior notes, issued to qualified investors, mature in 2032 and will bear interest at 7.125% per year, paid semiannually. Mr. Cooper and wholly owned domestic subsidiaries of Nationstar, other than certain excluded subsidiaries, will guarantee the senior notes. 

“It is expected that the net proceeds of the offering will be used to repay a portion of the amounts outstanding under Mr. Cooper’s MSR facilities,” the company stated in a news release. 

The transaction is expected to close around Feb. 1 since it’s subject to customary closing conditions. 

Mr. Cooper, the target of a cyberattack in November, is expected to release its earnings statement on Feb. 9. The company released its preliminary unaudited financial information on Monday, which showed $69 million in pretax income in fourth-quarter 2023, comparing favorably to a $10 million loss in Q4 2022.

Mr. Cooper said its overall pretax “operating” income came in at $155 million in Q4 2023, which excludes $27 million related to the cyber incident.  

Regarding its various businesses, pretax income with servicing operations reached $184 million in Q4 2023, compared to $98 million in the final quarter of 2022. Meanwhile, pretax income with loan origination finished at $9 million in Q4 2023, compared to a $14 million loss in Q4 2022.  

According to the company, it incurred a $41 million mark-to-market loss on its MSR portfolio in Q4 2023, net of hedge gains. Its servicing portfolio grew to $992 billion in the quarter and is expected to reach $1.1 trillion in first-quarter 2024. 

Dallas-based Mr. Cooper reportedly ended the quarter with $2.4 billion in available liquidity and $572 million in unrestricted cash. It also had $1.85 billion in unused lines.