Moody’s assigns Home Point B1, notes B2

Moody’s Investors Service said it gave a first-time B1 corporate family rating to Home Point Capital Inc. and a B2 long-term unsecured debt rating to the company’s planned $500 million of five-year senior unsecured notes offering. The outlook is stable.

“The ratings reflect Home Point’s solid market position in the United States of America (government of United States of America, Aaa stable) mortgage industry as the third-largest wholesale mortgage originator and the thirteenth-largest correspondent mortgage originator year-to-date in 2020. While the company reported GAAP losses in 2018 and 2019, its profitability had been very strong to-date in 2020,” Moody’s said in a press release.

The agency assigned the notes the B2, based on Home Point’s B1 corporate family rating and the application of its loss given default for speculative-grade companies methodology and model, which incorporate their priority of claim and strength of asset coverage.

Home Point will use the proceeds to pay down its mortgage servicing rights facility by $241 million and fund a $250 million dividend distribution to shareholders. Home Point filed for an initial public offering on Friday.

The outlook reflects the expectation Home Point will maintain its strong profitability and capital levels, without a material weakening of its liquidity profile over the next 12-18 months, against the backdrop of prolonged low-interest rates, Moody’s said.

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