S&P lowers LD Holdings

S&P said it lowered the ratings on LD Holdings Group LLC and its senior unsecured notes to B from B+. The recovery rating of 4 indicating an average recovery (45%) in default.

“The one-notch downgrade reflects LD's poor operating performance and our expectation of leverage staying above 5x. The weaker-than-expected results are partially mitigated by debt to tangible equity 1x-1.5x for 2022,” S&P said in a press release.

For the rolling 12 months ended March 31, LD's gross debt to adjusted EBITDA rose to 7.9x versus 2x at year-end 2021.

“The rise in mortgage interest rates will continue to create headwinds for the mortgage industry as origination volume is expected to decline primarily due to refinancing burnout. As of March 31, 2022, LD's origination volume declined to $21.5 billion from $29 billion the prior quarter and $41.5 billion in March 2021,” the agency said.

The outlook is negative.

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