REFILE-TEXT-S&P: Nationstar ratings unchanged following debt issuance
Sept 20 - Standard & Poor's Ratings Services today said its ratings on Nationstar Mortgage LLC (B+/Stable/--) are unchanged following the firm's announcement that it will issue $300 million in additional unsecured debt. Our ratings on Lewisville, Texas-based Nationstar are based on the firm's dependence on wholesale funding; weak, though improved, profitability; and elevated leverage following four debt issuances totaling $700 million since December 2011. The offsetting positive rating factors include the firm's low credit risk, good risk-management practices, and favorable market conditions. From 2007-2012, Nationstar has been growing its two complementary business lines: mortgage servicing and origination. It has done so by expanding its "high-touch" servicing operation to take advantage of the market's need for more capable servicers and by changing its origination platform so that it now originates prime loans instead of subprime mortgages. We could lower the rating if earnings and interest coverage deteriorate materially, pushing EBITDA interest coverage, after adjustments excluding some nonrecourse debt, to less than 2.0x for multiple quarters. We could also downgrade if leverage, as measured by average nonrecourse debt to EBITDA, exceeds 4x for multiple quarters without a credible plan to return to historical levels of 1.5x-2.5x.
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