KBRA Releases Rating Report for Private National Mortgage Acceptance Company, LLC

On February 20, 2018, Kroll Bond Rating Agency (KBRA) assigned an issuer rating of BB+ with a Stable Outlook to Private National Mortgage Acceptance Company, LLC (“PNMAC” or “the Company”), a residential mortgage originator and servicer based in Westlake Village, CA. PNMAC is a controlled subsidiary of PennyMac Financial Services, LLC (NYSE: PFSI) and the Investment Manager for PennyMac Mortgage Investment Trust (NYSE: PMT.)

The assigned BB+ issuer rating reflects the Company’s solid profitability, driven by its efficient origination platform, experienced management team and top-ten market share in the U.S (as a residential mortgage seller and servicer). PNMAC’s leverage levels are considered suitable for the assigned rating and the Company’s exposure to credit risk is minimal as it purchases and originates primarily Ginnie Mae, Fannie Mae and Freddie Mac eligible residential mortgages. PNMAC’s operating platform was built organically and is largely free of regulatory issues facing legacy, non-bank mortgage companies. The rating also considered that overall mortgage origination volume will likely be down 2018 and PNMAC will not replicate peak earnings demonstrated in 2016 and 2017.

Ratings are primarily constrained PNMAC’s by a reliance on shorter term secured funding and a relatively short operating history limited to the post-crisis era and a benign credit and interest rate environment. The Company is also exposed to interest rate volatility and is reliant on MSR hedging effectiveness to achieve consistent profitability. Also, PNMAC’s expansion into consumer direct and other production growth initiatives outside the Company’s core competencies may introduce new risks. While not expected in the near term, GSE reform could have a significant impact on PNMAC’s business model. KBRA relies on the financial statements of PFSI, as PNMC’s financial results are consolidated under PFSI and are substantially the same.

The ratings were assigned using KBRA’s Global Finance Company Rating Methodology, published November 28, 2017.

To read the report, please click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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