Key facts
- CrossCountry Intermediate HoldCo priced an upsized offering of $750 million in senior notes due 2031.
- The proceeds will refinance mortgage servicing rights (MSR) facilities and pay related fees.
- The acquisition of Two Harbors Investment Corp. for $1.26 billion is expected to close around August 12.
- Fitch Ratings expects to rate the senior unsecured notes 'BB-(EXP)'.
- CCM's corporate leverage is projected to rise to 2.4x post-acquisition, from 1.2x, before targeting 1.0x.
- The combined entity is expected to become the eighth-largest servicer by owned portfolios.
CrossCountry Intermediate HoldCo, the parent of CrossCountry Mortgage (CCM), has priced an upsized offering of $750 million in senior notes due in 2031. The issuance, which is 50% higher than initially anticipated, aims to refinance mortgage servicing rights (MSR) facilities tied to the company's growth strategy.
The 7.75% senior unsecured notes are guaranteed by CCM and future wholly owned domestic restricted subsidiaries. The transaction is expected to close around August 12, subject to customary conditions. Proceeds will be used to repay amounts outstanding under CCM's MSR line of credit and cover related fees and expenses.
This offering follows previous reports that CCM planned to issue $500 million in senior unsecured notes as its $1.26 billion acquisition of Two Harbors Investment Corp. approached its August closing. Fitch Ratings anticipates assigning an expected rating of 'BB-(EXP)' to the issuance, with proceeds likely directed towards MSR-backed facilities used for the Two Harbors deal.
Upon completion, the acquisition is expected to significantly expand CCM's servicing portfolio, adding $159 billion to its existing $202 billion book as of the first quarter. This would elevate CCM's ranking from the 15th to the 8th largest servicer by owned portfolios. Fitch projects CCM's corporate leverage will increase to 2.4x post-acquisition, up from 1.2x in Q2 2026 and exceeding the agency's 1.5x downgrade trigger. However, Fitch also noted that retained earnings growth is expected to reduce leverage toward CCM's medium-term target of 1.0x.
Analysts view the shift from secured to unsecured debt as a credit positive, as it frees up collateral and supports liquidity. CCM has stated that while leverage will temporarily increase, the larger, more cash-generative platform with higher recurring servicing cash flows and an expanded MSR portfolio should support deleveraging.