S&P rates New Residential Investment B, notes B-

S&P said it assigned its B issuer credit rating to New Residential Investment Corp. (NRZ). Concurrently, the agency gave a B- issue rating to New Residential’s planned $550 million of senior unsecured notes.

The rating on NRZ’s senior unsecured debt is a notch lower than the issuer credit rating because priority debt significantly exceeds 30% of adjusted assets, S&P said.

“We view NRZ’s unsecured issuance as leverage neutral because proceeds will mainly be used to repay its existing term loan. We believe this transaction marginally diversifies NRZ’s funding while decreasing its reliance on secured financing. This continues a trend of an improving funding mix as the company has moved away from mark to market and toward increased use of term funding,” S&P said in a press release.

The outlook is negative. The outlook reflects the possibility of further deterioration in macroeconomic conditions could erode the company’s liquidity because of additional margin calls. That leverage may come under pressure from erosion in the fair value of the company’s investments over the next 12 months, the agency said.

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