Nationstar Mortgage Holdings (NSM) priced $2 billion of advance securitizations Thursday that will provide an incremental 1.75% interest rate savings to existing advance credit facilities.
In addition, the advance rate increases from roughly 85% to 93% — lowering the capital required to finance the debt, according to Compass Point.
“The 1.75% interest expense savings is 0.75% better than Nationstar assumes in their guidance for 10 basis points of pretax profitability in the servicing segment for 2014,” analysts for Compass Point explained.
The advance securitizations were $1 billion of fixed-rate notes and $1 billion of variable funding notes with a weighted average interest rate of 2.1%, the company released Thursday.
These notes replace $1.9 billion of advance facilities that are primarily tied to Libor. Also, the 93% advance rate would free up roughly $160 million of capital from the $300 million required in the previous facilities.
“We expect Nationstar to issue between $3 billion and $5 billion of securitizations in the back half of this year after the $101 billion of private label servicing from the Bank of America deal is boarded near the end of June or early July,” Compass Point concluded.
