S&P Global Ratings revised its outlook on PennyMac Financial Services to negative from stable and affirmed its B+ long-term issuer credit rating.
S&P noted a decline in the company's gain-on-sale margins to 0.88% in 2018 from 1.13% in 2017, which caused PennyMac Financial Services' adjusted EBITDA to slip to $365 million in 2018 from $431 million in 2017. Together with the issuance of two tranches of term notes in 2018, the company's leverage, measured by debt to adjusted EBITDA, increased to 4.2x from 2.56x in 2017.
S&P said competition in the mortgage origination market will remain high, so it expects PennyMac Financial Services' 2019 gain-on-sale margins to be relatively flat from the year-ago period. The rating agency also said it expects the company to operate with a leverage of 4.0x to 4.5x over the next 12 months.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.