UWM to issue $500M in unsecured debt, aims to pay down MSR facilities

UWM Holdings Corp., the parent company of leading U.S. mortgage lender United Wholesale Mortgage (UMW), announced Thursday its plan to raise $500 million in debt through a private offering of senior notes that mature in 2030. 

The company intends to use the proceeds to pay down outstanding amounts on its mortgage servicing rights (MSR) facilities and for general corporate purposes, according to filings with the Securities and Exchange Commission (SEC).

The debt, which will be offered to qualified investors, will be guaranteed on a senior unsecured basis by UWM, ranking pari passu in payment priority with UWM’s existing senior unsecured notes due to this guarantee.

Following the announcement, Fitch Ratings assigned a ‘BB-(EXP)’ rating to the notes. It noted that the issuance may not significantly impact UWM’s leverage profile, as proceeds are expected to refinance existing secured debt.

According to Fitch, UWM has a strong 43% market share in the wholesale mortgage market, improved capitalization, solid servicing assets, robust integrated technology and an experienced management team. 

But the company’s rating is constrained by the cyclical nature of the mortgage market, reliance on short-term, uncommitted secured funding facilities, and the central role of president and CEO Mat Ishbia.

“Fitch could upgrade the ratings by one notch if the company economically addresses its $800 million 2025 unsecured note maturity without further asset encumbrance and maintains corporate leverage at or below 1.0x,” the ratings agency explained.

At the end of the third quarter, UWM reported $2.5 billion in available liquidity, including $636 million in cash. Its total non-funding debt stood at $2.4 billion, with a debt-to-equity ratio of 1.11.

Fitch estimates that mortgage servicers and lenders will have $1.5 billion in debt maturing in 2025, following refinances or extensions by companies such as Freedom Mortgage and loanDepot over the past 15 months. Additionally, Mr. Cooper, PennyMac and others have issued $4.9 billion in debt offerings since the fourth quarter of 2024, using the funds to pay down MSR lines and extend terms.