Essent Group Ltd. Prices $500 Million Senior Unsecured Notes Offering

Rhea-AI Summary

Essent Group (NYSE: ESNT) has announced the pricing of its $500 million senior unsecured notes offering. The notes will have a 6.250% interest rate, payable semiannually, and will mature on July 1, 2029. The offering is expected to close on July 1, 2024, subject to customary conditions.

The company plans to use approximately $425 million of the proceeds to repay existing term borrowings, with the remaining funds allocated for general corporate purposes. J.P. Morgan, BofA Securities, and Goldman Sachs are among the joint book-running managers for the offering.

Prospective investors can access the prospectus through the SEC's website or by contacting J.P. Morgan or BofA Securities directly. This announcement does not constitute an offer to sell or buy securities.

Positive

• Essent Group has successfully priced its $500 million senior unsecured notes offering.
• The notes will have an attractive 6.250% interest rate, providing potential income to investors.
• Approximately $425 million of the proceeds will be used to repay existing term borrowings, improving the company's debt profile.

Negative

• The offering will increase the company's debt by $75 million after repaying existing term borrowings.

Insights

Financial Analyst

Essent Group Ltd.'s announcement about pricing its $500 million senior unsecured notes offering is significant for several reasons. Firstly, the $500 million raised through these notes at an interest rate of 6.250% indicates strong confidence in the company's creditworthiness by the financial markets. Senior unsecured notes imply that these debt instruments are not backed by the company's assets, making investors reliant solely on the company's ability to generate enough cash flow to meet its obligations.

The company's decision to allocate approximately $425 million of the net proceeds to repay existing term borrowings is strategic. This move will likely lower their interest expense given the current rate on the term borrowings versus the 6.250% rate of the new notes. Additionally, the remaining funds for general corporate purposes provide Essent Group with flexibility to pursue growth opportunities, which can positively impact long-term shareholder value.

From a retail investor's perspective, the issuance of senior unsecured notes can signal the company's solid financial health and its proactive approach to managing debt. Investors should be aware, though, of the company's ability to cover the interest payments and principal by the maturity date in 2029. Monitoring future financial statements to ensure consistent cash flow and profitability will be critical.

Market Research Analyst

This offering is noteworthy as it reflects the broader trends in the credit markets and investor sentiment. In a time when interest rates are generally rising, securing a 6.250% rate suggests that Essent Group has found favorable conditions to lock in their borrowing costs. It also shows that there is sufficient demand for corporate debt, indicating investor confidence not only in Essent but in the sector overall.

The co-managers involved, such as J.P. Morgan, BofA Securities and Goldman Sachs, among others, add a layer of credibility to the offering. Their involvement can be interpreted as a vote of confidence in Essent's financial stability and market position.

Retail investors should recognize the involvement of such high-profile institutions as a positive sign. However, they should also consider market conditions and the sector's overall outlook, to gauge the potential risks and rewards associated with the company's strategic financial moves. Moreover, observing the deployment of the remaining funds can provide insights into the company's future growth strategies.

HAMILTON, Bermuda--(BUSINESS WIRE)-- Essent Group Ltd. (NYSE: ESNT) (the “Company”) today announced that it has priced its public offering (the “Offering”) of $500 million aggregate principal amount of senior unsecured notes (the “Notes”). The Offering is expected to close on July 1, 2024, subject to customary closing conditions.

The Notes will pay interest semiannually at a rate of 6.250% per year and will mature on July 1, 2029. The Company intends to use approximately $425 million of the net proceeds of the Offering to repay all of the term borrowings outstanding under the term loan portion of its existing credit facility, and the remainder for general corporate purposes.

J.P. Morgan, BofA Securities, Goldman Sachs & Co. LLC, Citizens Capital Markets, and US Bancorp are acting as joint book-running managers, and Huntington Capital Markets, KeyBanc Capital Markets, M&T Securities, Ramirez & Co., Inc., and Siebert Williams Shank are acting as co-managers, for the Offering.

The Notes are being offered for sale pursuant to a shelf registration statement on Form S-3 (Registration No. 333-277287), filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2024, which includes a prospectus for the offering to which this press release relates, and a related prospectus supplement, filed with the SEC on June 26, 2024. Before making an investment, potential investors should first read the prospectus supplement and accompanying prospectus, the registration statement and the other documents that the Company has filed or will file with the SEC for more complete information about the Company and the Offering. A copy of the prospectus supplement and the accompanying prospectus for the Offering has been filed with the SEC and is available for free on the SEC's website: www.sec.gov. Alternatively, copies may be obtained from J.P. Morgan Securities LLC by calling 1-212-834-4533 or BofA Securities, Inc. at 1-800-294-1322.

This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any security of the Company, nor will there be any sale of any such security in any jurisdiction in which such offer, sale or solicitation would be unlawful. The Offering may be made only by means of a prospectus supplement and accompanying prospectus filed with the SEC.

About the Company:
Essent Group Ltd. (NYSE: ESNT) is a Bermuda-based holding company (collectively with its subsidiaries, “Essent”) which serves the housing finance industry by offering private mortgage insurance, reinsurance, risk management products and title insurance and settlement services to mortgage lenders, borrowers, and investors to support homeownership.

Source: Essent Group Ltd.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626892571/en/

Media

610.230.0556

media@essentgroup.com

Investor Relations

Philip Stefano

Vice President, Investor Relations

855-809-ESNT

ir@essentgroup.com

Source: Essent Group Ltd.

FAQ

What is the interest rate for Essent Group 's (ESNT) new senior unsecured notes?

The interest rate for Essent Group 's new senior unsecured notes is 6.250% per year.

When will Essent Group 's (ESNT) $500 million notes offering close?

The $500 million notes offering is expected to close on July 1, 2024, subject to customary closing conditions.

What will Essent Group (ESNT) use the proceeds from the $500 million notes offering for?

Essent Group plans to use approximately $425 million to repay existing term borrowings and the remainder for general corporate purposes.

Who are the joint book-running managers for Essent Group 's (ESNT) $500 million notes offering?

J.P. Morgan, BofA Securities, Goldman Sachs, Citizens Capital Markets, and US Bancorp are acting as joint book-running managers for the offering.

When will the notes offered by Essent Group (ESNT) mature?

The notes will mature on July 1, 2029.