S&P trims Mr. Cooper Group

S&P said it lowered the issuer credit rating on Mr. Cooper Group Inc. (COOP) and its subsidiaries and the senior unsecured issue rating to B from B+. The recovery rating on the unsecured debt remains 4, indicating average recovery (40%) in a simulated default.

“The one-notch downgrade reflects COOP's weaker-than-expected operating performance, as rising interest rates led to plummeting mortgage origination volumes with gain-on-sale margins compressing,” the agency said in a press release.

S&P noted COOP’s gross debt to adjusted EBITDA rose to 5.7x for the rolling 12 months ended Sept. 30 versus 2.7x at year-end 2021, which is well above the agency’s downside threshold of 4x.

The outlook is stable.

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