Moody’s upgrades Mr. Cooper Group following Rocket acquisition

Investing.com -- Moody’s Ratings has upgraded Mr. Cooper Group Inc.’s corporate family rating to Ba1 from Ba3 following its acquisition by Rocket Companies, Inc., which closed on Wednesday.

The rating agency also upgraded Nationstar Mortgage Holdings Inc.’s backed senior unsecured debt rating to Ba1 from B1, Nationstar Mortgage LLC’s long-term issuer rating to Ba1 from B1, and Home Point Capital Inc.’s senior unsecured debt rating to Ba1 from B1.

These actions conclude the reviews for upgrade that began on March 31, 2025. The outlooks on Mr. Cooper and Nationstar Mortgage LLC were changed to stable from ratings under review.

As part of the transaction, most of Mr. Cooper’s senior unsecured notes were either redeemed, tendered, or exchanged for notes issued by Rocket. The remaining notes were assumed by Rocket Mortgage, LLC as the new borrower. Following these actions, Moody’s will withdraw Mr. Cooper’s CFR and Nationstar Mortgage LLC’s long-term issuer rating.

Moody’s also affirmed Rocket Companies’ Ba1 corporate family rating and Ba1 long-term backed senior unsecured rating, along with Rocket Mortgage, LLC’s Ba1 long-term backed senior unsecured rating. The outlook on both entities remains stable.

The stable outlook reflects Moody’s expectation that Rocket’s current weaker-than-historical profitability will improve over the next 12-18 months, driven by increased profitability from the Mr. Cooper acquisition and higher industry origination volumes.

Moody’s noted that successful integration of the Mr. Cooper and Redfin acquisitions could drive both cost and revenue synergies, enhance operating leverage, boost earnings, and moderately reduce earnings volatility for the combined entity.

The rating agency outlined potential factors for future upgrades, including demonstrated financial resilience with net income to average assets exceeding 4.0%, maintenance of a solid capital position with tangible common equity to tangible managed assets above 25%, and strong liquidity and funding metrics.

Conversely, Rocket’s ratings could face downgrade pressure if its financial profile weakens, particularly if tangible common equity to tangible managed assets falls below 20% or if profitability remains weak with net income to average assets below 3.0%.

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