S&P: OneMain Holdings Inc. Outlook Revised To Stable From Negative On Declining Leverage; 'B' Rating Affirmed
"The outlook revision reflects OneMain's declining leverage over the past six months," said S&P Global Ratings credit analyst Gaurav Parikh. Debt to adjusted total equity decreased to 11.9x as of June 30, 2016, from 21.9x as of Dec. 31, 2015. We believe OneMain's leverage will continue to decline as core earnings are added to equity. The management team is targeting a leverage of 7.0x by the second half of 2018.
The stable outlook reflects our expectations that over the next 12 months, OneMain will maintain its competitive position in nonprime consumer lending and continue to gradually reduce its leverage to below 10x. The outlook also incorporates our expectation that leverage will decline toward the company's long-term target of 7x over the next two years and that net charge-offs will remain below 10% on a consistent basis.
We could lower the rating over the next 12 months, if debt-to-adjusted total equity were to rise substantially above 12.0x with no cogent plan of reducing it. We could also lower the rating if net charge-offs rose above 10% on a constant basis. We could also lower the rating if credit cards, credit unions, or peer-to-peer lenders encroach on the market share of the subprime installment lending industry and negatively affect OneMain's earning capacity.
We see limited upside in the ratings over the next 12 months. Over time, we could raise the rating if OneMain maintains leverage comfortably below 6.5x.
Комментарии