California-based Pennymac Financial Services raised $750 million in unsecured debt with qualified institutional investors, 15% more than it initially expected, the company announced Thursday.
Pennymac will use the proceeds of the offering to repay a portion of the company’s secured debt due in 2025. The remainder will be used for “other general corporate purposes,” the company said in an 8k filing with the Securities and Exchange Commission (SEC).
The new debt, with maturity in December 2029, will bear a higher interest rate at 7.875% annually.
According to the company, the offering size was increased from the previously announced $650 million aggregate principal amount of notes.
Other mortgage companies also faced high demand for debt issued this year. In September, Freedom Mortgage raised $1.3 billion in about 24 hours, higher than the $1 billion expected by the company, reflecting an oversubscribed deal.
Pennymac’s offering is expected to close on Dec. 11, subject to customary closing conditions. The notes will be guaranteed on an unsecured senior basis by the company and its subsidiaries, which means they have no collateral.
The company’s debt-to-equity ratio was 2.6 times at the end of September, lower than its target of 3.5 times.
A total of $1.8 billion is unsecured debt. Besides the new notes issued this week, the company has $650 million at 5.375% due in October 2025, $650 million at 4.250% due in February 2029 and $500 million at 5.750% with maturity in September 2031.
