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S&P gives B to Freedom Mortgage notes
S&P said it assigned its B issue and 4 recovery ratings to Freedom Mortgage Holdings LLC's proposed $500 million of senior unsecured notes due 2029. The 4 recovery rating indicates an average (30%-50%; rounded estimate: 40%) recovery in default.
“At the same time, we also affirmed our B issue-level rating on Freedom's existing senior unsecured notes and revised the recovery rating on those notes to 4 from 3. While the company is diversifying its funding by issuing unsecured notes, in our view, the new notes would reduce the collateral value available to the existing unsecured noteholders in a default scenario,” S&P said in a statement. The 3 recovery rating means a meaningful recovery of 50% if Freedom defaults.
The company plans to use the proceeds to partially repay borrowings under its mortgage servicing rights facilities, which had a combined outstanding balance of about $2.9 billion as of Sept. 30, 2023.
The outlook is stable.
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