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KBRA Assigns Ratings to Series 2025-GT1 Term Notes from PNMAC GMSR Issuer Trust

Strategic Insights

— 1 min read

The Kroll Bond Rating Agency, LLC has issued ratings of 'BBB (sf)' to the Series 2025-GT1 Term Notes from PNMAC GMSR Issuer Trust, backed by mortgage servicing rights (MSR) on loans underlying Ginnie Mae guaranteed mortgage-backed securities. The rating is primarily dependent on the credit rating of Private National Mortgage Acceptance Company, LLC (PNMAC), as the repurchase guarantor. KBRA's rating on the notes includes a one-notch uplift due to certain transaction features that reduce the risk of MSR extinguishment by Ginnie Mae.

Key Takeaways:

  • The rating of the Series 2025-GT1 Term Notes is primarily dependent on the credit rating of PNMAC, which is rated BBB-/Stable by KBRA.
  • The transaction features that contribute to the one-notch uplift on the rating of the notes include: (i) alignment of interest between PLS and Ginnie Mae, (ii) a tri-party acknowledgement agreement, (iii) an uncapped MBS Advance VFN, and (iv) structural tests and triggers designed to amortize the term notes upon test failure.
  • The notes are not a direct debt obligation of PLS or its affiliates, but PNMAC's guarantee of PLS's obligations under the PC Repurchase Agreement creates a significant indirect dependency on PNMAC to make payments on the rated notes.
  • PNMAC Loan Services, LLC (PLS) is the master trust issuer of notes backed by MSR participation certificates evidencing participation interest in mortgage servicing rights (MSR) on loans underlying Ginnie Mae guaranteed mortgage-backed securities.
  • Ginnie Mae granted MSR rights to PLS's affiliate, PLS's affiliate, which has certain transaction features described more fully in KBRA's new issue report.

Statistics:

  • The rating of the Series 2025-GT1 Term Notes is 'BBB (sf)'.
  • PNMAC's credit rating is BBB-/Stable.
  • The one-notch uplift on the rating of the notes is due to the alignment of interest between PLS and Ginnie Mae, the tri-party acknowledgement agreement, the uncapped MBS Advance VFN, and the structural tests and triggers.

Sources:

  • KBRA assigns ratings of 'BBB (sf)' to the Series 2025-GT1 Term Notes from PNMAC GMSR Issuer Trust. Source: Kroll Bond Rating Agency, LLC.
  • Private National Mortgage Acceptance Company, LLC (PNMAC) is rated BBB-/Stable. Source: Kroll Bond Rating Agency, LLC.

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