OneMain to sell more unsecured debt in 2018, boosting credit ratings

By Devika Patel

Knoxville, Tenn., Feb. 15 – OneMain Holdings, Inc.’s credit ratings have been improving and the company expects further improvement in 2018 due to its plans to issue more unsecured debt, extending its maturities.

The company sold $875 million of 5 5/8% non-callable 5.25-year senior notes in the last quarter and retired $700 million of 6¾% unsecured debt.

“We were very active in the debt markets in the fourth quarter,” executive vice president and chief financial officer Scott T. Parker said on the company’s fourth quarter and year ended Dec. 31, 2017 earnings conference call on Thursday.

“We issued $875 million of five-year unsecured debt at 5.6% as well as $600 million of one-year revolving direct auto ABS debt at 2.6%.

“In addition, shortly after the quarter end, we retired $700 million of our 6.75% 2019 unsecured debt maturities,” he said.

The company’s corporate credit ratings have improved and further improvement is forecasted from the company’s plans to issue more unsecured debt.

“Looking back over the last year or so, we have been able to achieve ratings improvements in our secured and unsecured programs,” Parker said.

“Specifically, we issued our first direct auto deal with a triple A tranche.

“We also received multiple upgrades on our corporate ratings.

“We plan to build on this momentum in 2018 and increase our mix of unsecured debt.

“Doing so will enhance our strong liquidity profile even further by freeing up assets and extending the duration of our maturities.

“We believe these efforts will lead to continued improvements in our credit ratings,” Parker said.

OneMain has a “strong” liquidity position.

“On the liquidity side, we continue to be in a very strong position,” Parker said.

“We had $5 billion of unencumbered consumer loans and over $5 billion of undrawn conduit capacity,” he said.

As of Dec. 31, 2017, the company had $987 million of cash and cash equivalents.

OneMain had undrawn revolving conduit facilities of $5.1 billion and long-term debt of $15.1 billion at Dec. 31, 2017.

On Dec. 5, the company priced an upsized $875 million issue of 5 5/8% non-callable 5.25-year senior notes (//B) at par to yield 5.627% in a drive-by.

The deal was increased from $500 million.

The yield printed slightly wide of yield talk that was set in the 5½% area.

Goldman Sachs & Co. was the left bookrunner for the public offering. Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, Natixis, RBC Capital Markets LLC and SG CIB were the joint bookrunners.

The issuing entity was OneMain’s indirect, wholly owned subsidiary, Springleaf Finance Corp.

Proceeds were earmarked for general corporate purposes, which may include debt repayments.

On Dec. 8, OneMain announced plans to redeem all $700 million of its 6¾% senior notes due 2019 on Jan. 8 at 103.375% of par plus accrued interest up to the redemption date.

OneMain is an Evansville, Ind.-based consumer finance company.

© 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.