Nationstar priced $2.0 billion of advance securitizations that will provide an incremental 1.75% interest rate savings to existing advance credit facilities.

Analysts at Compass Point Research and Trading said in a note to clients today that the 1.75% of interest expense savings is 0.75% better than NSM assumed and on the $2.0 billion deal and translates into an additional $0.10/share above the company's guidance.

In addition, the advance rate increased from roughly 85% to 93%, which means that it lowered the capital required to finance the debt. Analysts at Compass said that the better advance rate unties approximately $160 million of capital from the $300 million required to finance previous advance facilities. 

Nationstar subsequently issued a press release confirming that that advance securitizations were $1.0 billion of fixed rate notes and $1.0 billion of variable funding notes with a weighted average interest rate of 2.1%. The weighted average term is 3.0 years.

Credit Suisse, Wells Fargo Securities, and Royal Bank of Scotland are lead managers on the deal.

“We expect NSM to issue $3 billion to $5 billlion of securitizations in the back half of this year after the $101B of private label servicing from the Bank of America deal is boarded near the end of June or early July,” said analysts at Compass. “There are over $4.0 billion of advances associated with this block of servicing.”

Nationstar is one of the biggest non-bank mortgage servicers, having acquired serving rights on a number of portfolios of loans over the past 15 months. It is majority-owned by private equity firm Fortress Investment Group.

“This securitization is yet another example of Nationstar executing on our stated goals of lowering advance funding costs and increasing the profitability of our servicing segment," Jay Bray, Nationstar’s CEO, said in the press release.

"This execution also diversifies our funding sources and exchanges floating-rate debt with fixed-rate term debt locked in at extremely favorable rates," he added. "We intend to access the ABS markets several times in the upcoming quarters as we board acquired portfolios.”

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