PennyMac Financial Services, Inc. (NYSE:PFSI), a $5.4 billion market cap financial services company, has successfully closed an offering of $850 million in senior notes, the company disclosed today. According to InvestingPro analysis, the company is currently trading near its Fair Value, with analysts setting price targets ranging from $111 to $141. The 6.875% notes, maturing on February 15, 2033, are part of the firm’s strategy to manage its debt portfolio and support general corporate activities.
The offering, exempt from registration under the Securities Act of 1933, targeted qualified institutional buyers and non-U.S. persons in compliance with Regulation S. Proceeds from the sale are earmarked for repaying certain secured borrowings, including repurchases or repayments of the company’s 5.375% senior notes due in October 2025. This debt management comes at a crucial time, as InvestingPro data shows the company’s debt-to-equity ratio stands at 5.38x, with a current ratio of 0.91.
The notes were issued under an indenture agreement with U.S. Bank Trust Company, National Association, serving as trustee. Interest payments are set semi-annually, with the first payment due on August 15, 2025. The indenture includes standard covenants and default events typical for non-investment grade debt issuers, such as restrictions on additional debt, dividends, asset sales, and transactions with affiliates.
PennyMac retains the option to redeem the notes before February 15, 2028, at a 100% principal amount plus a make-whole premium. Additionally, up to 40% of the notes may be redeemed using equity offering proceeds at 106.875% of their principal amount. Post-February 15, 2028, redemptions are at prices specified in the indenture.
In the event of a change of control triggering event, note holders may request the issuer to repurchase their notes at 101% of the principal amount, including accrued interest.
The notes rank senior to any future subordinated debt and equally with existing senior indebtedness. They are unsecured and are guaranteed by the issuer’s domestic subsidiaries, excluding certain ones. This guarantee places them equally with other senior unsecured obligations of the guarantors and structurally subordinate to non-guarantor subsidiaries’ liabilities.
This financial maneuver is based on a press release statement and reflects PennyMac’s strategic financial management decisions.
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