OneMain gets leverage to 6.9x, targets 6x this year, touts liquidity

By Devika Patel

Knoxville, Tenn., Feb. 12 – OneMain Financial Holdings, Inc. plans to get its adjusted tangible leverage ratio to 6x by year’s end, having reduced leverage in 2018 to 6.9x from 9.4x.

The company has been focused on enhancing liquidity and now has enough to fund its needs for two years without accessing the capital markets.

“We continued to strengthen the balance sheet through further reducing our adjusted tangible leverage ratio to 6.9x at year-end. ... We believe it is prudent to continue to strengthen our balance sheet, so we will continue to use excess capital to reduce our tangible leverage,” president and chief executive officer Douglas H. Shulman said Tuesday on the company’s earnings conference call for the fourth quarter and year ended Dec. 31.

“We think a good way to position the business for the long run is to get to 6x this year. That’s our target,” executive vice president and chief financial officer Scott T. Parker said on the call.

“We want to make sure that we have a conservative balance sheet. We think it’s a prudent way to run a consumer lending business.

“The team has made real significant strides in de-levering. We feel really good that we got down to just under 7x this year.”

The company now has enough liquidity to fund its needs for two years without accessing the capital markets.

“We have been focused on mitigating interest-rate risk and enhancing liquidity,” Parker said.

“We’ve done this by increasing our mix of secured debt and extending the duration of our liabilities.

“Our liquidity position is strong.

“This liquidity allows us to fund our expected cash outlays, originations, scheduled debt maturities and operating expenses for more than 24 months with no access to the capital markets.”

The company also issued $2.85 billion of unsecured bonds in 2018.

“In 2018, we reached our near-term goal of 50% unsecured funding through the issuance of nearly $3 billion of unsecured bonds at attractive rates,” Shulman said.

As of Dec. 31, the company had $15.5 billion of outstanding debt.

The company had $679 million of cash and cash equivalents as of Dec. 31, compared with $987 million as of Dec. 31, 2017.

The company had about $6 billion of undrawn revolving conduit facilities as of Dec. 31.

OneMain is an Evansville, Ind.-based lender.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.