S&P improves Mr. Cooper recovery rating

S&P said it revised its recovery rating for Mr. Cooper Group Inc.’s senior unsecured recovery rating to 3 from 4, indicating meaningful (rounded estimate: 50%) recovery in default. A 4 recovery rating indicates average (30%-50%; rounded estimate: 45%) recovery. The agency also changed its outlook for Mr. Cooper to positive from stable.

The agency said it expects the company's debt to EBITDA to decline below 5x in the next 12 months if overall industry trends continue. Mr. Cooper's lowered its gross debt to EBITDA to 5.3x as of the end of 2023 from 6.4x in 2022.

“The positive outlook reflects a one-in-three chance that we could upgrade Mr. Cooper in the next 12 months if it improves S&P Global Ratings-adjusted debt to EBITDA below 5x and maintains debt to tangible equity at or below 1.5x,” S&P said in a press release.

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