PennyMac Financial Services, Inc. Debt Disclosure
Note 15—Long-Term Debt
Notes Payable Secured by Mortgage Servicing Assets
Term Notes and Term Loans
The Company, through its wholly-owned subsidiaries PLS, PNMAC, and PNMAC GMSR ISSUER TRUST (the “Issuer Trust”) has entered into a structured finance transaction, in which PLS pledges and/or sells to the Issuer Trust participation certificates representing beneficial interests in Ginnie Mae mortgage servicing assets pursuant to a repurchase agreement. The Issuer Trust has issued a variable funding note to PLS, has issued secured term notes (the “Term Notes”) to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”), and has entered into a series of syndicated term loans with various lenders (the “Term Loans”). The Term Notes and Term Loans are secured by participation certificates relating to Ginnie Mae mortgage servicing assets financed pursuant to the servicing asset repurchase facilities, and rank pari passu with the mortgage servicing asset variable funding notes.
Following is a summary of the issued and outstanding Term Notes and Term Loans:
Maturity date | |||||||||
Issuance date |
| Principal balance |
| Annual interest rate spread (1) |
| Stated |
| Optional extension (2) | |
(in thousands) | |||||||||
Term Notes: | |||||||||
August 10, 2018 | $ | 425,000 | 3.40% | 8/25/2025 | (3) | ||||
June 3, 2022 | 500,000 | 4.25% | 5/25/2027 | 5/25/2029 | |||||
Term Loans: | |||||||||
February 28, 2023 | 680,000 | 3.00% | 2/25/2028 | 2/25/2029 | |||||
October 25, 2023 | 125,000 | 3.00% | 10/25/2028 | ||||||
$ | 1,730,000 | ||||||||
| (1) | Interest is charged at a rate based on SOFR plus a spread. |
| (2) | The Term Notes and Term Loans’ indentures provide the Company with the option to extend the maturity of the Term Notes or Term Loans as specified in the respective agreements. |
| (3) | Stated maturity date reflects the exercise by the Company of its option to extend the maturity of this issuance. |
Freddie Mac MSR Note Payable
On December 16, 2022, the Company issued a note payable that is secured by Freddie Mac MSRs. Interest is charged at a rate based on SOFR plus a spread as defined in the agreement. The note matures on November 13, 2024. The maximum amount that the Company may borrow under the note payable is $400 million, $350 million of which is committed and which may be reduced by other debt outstanding with the counterparty.
Notes payable secured by mortgage servicing assets are summarized below:
Year ended December 31, | |||||||||
| 2023 |
| 2022 |
| 2021 | ||||
(dollars in thousands) | |||||||||
Average balance | $ | 2,421,124 | $ | 1,584,383 | $ | 1,300,000 | |||
Weighted average interest rate (1) | 8.59% | 4.88% | 2.89% | ||||||
Total interest expense | $ | 211,085 | $ | 79,813 | $ | 39,782 | |||
| (1) | Excludes the effect of amortization of debt issuance costs totaling $3.2 million, $2.5 million and $2.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
December 31, | ||||||
2023 |
| 2022 | ||||
(dollars in thousands) | ||||||
Carrying value: | ||||||
Unpaid principal balance: | ||||||
Term Notes and Term Loans | $ | 1,730,000 |
| $ | 1,800,000 | |
Freddie Mac MSR Note Payable | 150,000 | 150,000 | ||||
1,880,000 | 1,950,000 | |||||
Unamortized debt issuance costs | (6,585) | (7,354) | ||||
$ | 1,873,415 | $ | 1,942,646 | |||
Weighted average interest rate | 8.82% | 7.46% | ||||
Assets pledged to secure notes payable (1): | ||||||
Servicing advances | $ | 354,831 | $ | 381,379 | ||
$ | 7,033,892 | $ | 5,897,613 | |||
Deposits | $ | 15,653 | $ | 12,277 | ||
| (1) | Beneficial interests in the Ginnie Mae MSRs, servicing advances and deposits together serve as the collateral backing servicing asset facilities that are included in Assets sold under agreements to repurchase and the Term Notes and Term Loans are included in Notes payable secured by mortgage servicing assets. |
Unsecured Senior Notes
The Company issued unsecured senior notes (the “Unsecured Notes”) to qualified institutional buyers under Rule 144A of the Securities Act. The Unsecured Notes are senior unsecured obligations of the Company and will rank senior in right of payment to any future subordinate indebtedness of the Company, equally in right of payment with all existing and future senior indebtedness of the Company and effectively subordinate to any existing and future secured indebtedness of the Company to the extent of the fair value of collateral securing such indebtedness.
The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by PFSI’s existing and future wholly-owned domestic subsidiaries (other than certain excluded subsidiaries defined in the indenture under which the Unsecured Notes were issued). The guarantees are senior unsecured obligations of the guarantors and will rank senior in right of payment to any future subordinate indebtedness of the guarantors, equally in right of payment with all existing and future senior indebtedness of the guarantors and effectively subordinate to any existing and future secured indebtedness of the guarantors to the extent of the fair value of collateral securing such indebtedness. The Unsecured Notes and the guarantees are structurally subordinate to the indebtedness and liabilities of the Company’s subsidiaries that do not guarantee the Unsecured Notes.
Following is a summary of the Company’s issued and outstanding Unsecured Notes:
Issuance date | Principal balance | Coupon interest rate | Maturity date | Optional redemption date (1) | |||||
(in thousands) | (annual) | ||||||||
September 29, 2020 | $ | 500,000 | 5.38% | October 15, 2025 | October 15, 2022 | ||||
October 19, 2020 | 150,000 | 5.38% | October 15, 2025 | October 15, 2022 | |||||
February 11, 2021 | 650,000 | 4.25% | February 15, 2029 | February 15, 2024 | |||||
September 16, 2021 | 500,000 | 5.75% | September 15, 2031 | September 15, 2026 | |||||
December 11, 2023 | 750,000 | 7.88% | December 15, 2029 | December 15, 2026 | |||||
$ | 2,550,000 | ||||||||
| (1) | Before the optional redemption date, the Company may redeem some or all of the Unsecured Notes for that issuance at a price equal to 100% of the principal amount, plus accrued and unpaid interest and a make-whole premium or the Company may redeem up to 40% of the Unsecured Notes for that issuance with an amount equal to or less than the net proceeds from certain equity offerings at the redemption price set forth in the indenture, plus accrued and unpaid interest. On or after the optional redemption date, the Company may redeem some or all of the Unsecured Notes for |
| that issuance at the redemption prices set forth in the indenture, plus accrued and unpaid interest. |
Year ended December 31, | |||||||||
| 2023 |
| 2022 |
| 2021 | ||||
(dollars in thousands) | |||||||||
Average balance | $ | 1,843,151 | $ | 1,800,000 | $ | 1,373,562 | |||
Weighted average interest rate (1) | 5.13% | 5.07% | 4.94% | ||||||
Total interest expense | $ | 98,396 | $ | 95,014 | $ | 70,208 | |||
| (1) | Excludes the effect of amortization of debt issuance costs of $3.8 million, $3.7 million and $2.3 million on for the years ended December 31, 2023, 2022 and 2021, respectively. |
December 31, | ||||||
2023 |
| 2022 | ||||
(dollars in thousands) | ||||||
Carrying value: | ||||||
Unpaid principal balance | $ | 2,550,000 |
| $ | 1,800,000 | |
Unamortized debt issuance costs and premiums, net | (30,349) | (20,080) | ||||
$ | 2,519,651 | $ | 1,779,920 | |||
Weighted average interest rate | 5.90% | 5.07% | ||||
Obligations Under Capital Lease
The Company had a capital lease transaction secured by certain fixed assets and capitalized software. The capital lease matured on June 13, 2022.
Obligations under capital lease are summarized below:
Year ended December 31, | ||||||
2022 | 2021 | |||||
(dollars in thousands) | ||||||
Average balance | $ | 848 | $ | 7,999 | ||
Weighted average interest rate | 2.18% | 2.11% | ||||
Total interest expense | $ | 20 | $ | 169 | ||
Maximum daily amount outstanding | $ | 3,489 | $ | 11,864 | ||
Maturities of Long-Term Debt
Maturities of long-term debt obligations (based on final maturity dates) are as follows:
Year ended December 31, | |||||||||||||||||||||
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
| Total | ||||||||
(in thousands) | |||||||||||||||||||||
Notes payable secured by mortgage servicing assets (1) | $ | 150,000 | $ | 425,000 | $ | — | $ | 500,000 | $ | 805,000 | $ | — | $ | 1,880,000 | |||||||
Unsecured senior notes | — | 650,000 | — | — | — | 1,900,000 | 2,550,000 | ||||||||||||||
Total | $ | 150,000 | $ | 1,075,000 | $ | — | $ | 500,000 | $ | 805,000 | $ | 1,900,000 | $ | 4,430,000 | |||||||
| (1) | The Term Notes and Term Loans’ indentures provide the Company with the option to extend the maturity of the Term Notes by years after their stated maturities. |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2023 | Feb 21, 2024 | Showing above |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 5, 2019 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.