S&P Global Ratings downgraded Mr. Cooper Group Inc.'s long-term issuer credit rating to B from B+.
The outlook on the rating is stable. The rating agency also lowered the issue rating on the company's unsecured notes to B from B+.
In downgrading the ratings, S&P said Mr. Cooper Group's leverage will increase to a range of 6.0x to 6.5x from its prior expectation of 5.0x to 5.25x over the next 12 months. The leverage increase is due to its recent acquisitions and the company's intent to fund the deals with financing its mortgage servicing rights and cash.
Mr. Cooper Group, which changed its name from WMIH Corp. in October 2018, acquired Assurant Inc.'s mortgage solutions business for $35 million in cash in August 2018. In November 2018, the company said it will acquire Pacific Union Financial LLC, and in January, it said it will purchase mortgage servicing rights worth $24 billion from International Business Machines Corp.
The acquisitions of Pacific Union Financial and mortgage servicing rights from IBM are expected to close in the first quarter.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings document referred to in this news brief can be found here.