Rithm Capital Corp. Announces Pricing of Offering of Senior Unsecured Notes

Rhea-AI Summary

Rithm Capital Corp. (NYSE: RITM) announces the pricing of $775 million senior unsecured notes due 2029 to reduce indebtedness and for general corporate purposes. The offering will close on March 19, 2024, targeting qualified institutional buyers in the U.S. and international buyers under Regulation S.

Insights

Financial Analyst

The pricing of Rithm Capital Corp's $775 million senior unsecured notes at 8.000% is a significant financial move that warrants a detailed analysis. The interest rate, set at 8.000%, is notably higher than the 6.250% of the notes due in 2025, which the company is looking to repurchase. This indicates a possible increase in borrowing costs for Rithm, potentially reflecting a higher risk perception among investors or a general rise in market interest rates.

From a financial perspective, the use of proceeds to reduce indebtedness is a prudent strategy, particularly when addressing higher-interest debt. However, the decision to issue new debt at a higher rate to pay off older debt might suggest a refinancing risk or a strategic move to extend debt maturities. Investors and analysts should examine the company's leverage ratios and interest coverage metrics post-transaction to assess the impact on financial health.

Moreover, the lack of registration rights implies that the notes are subject to liquidity constraints, which might affect their marketability. This could be a downside for investors looking for more liquid investment options. The closing of the offering by March 19, 2024 and the restriction on sales to qualified institutional buyers and non-U.S. persons under Rule 144A and Regulation S signify a targeted investment audience, which may limit the potential buyer pool.

Market Research Analyst

The corporate bond market where Rithm Capital Corp. is making its offering is influenced by various macroeconomic factors. The 8.000% interest rate on these senior unsecured notes is indicative of the current credit market conditions. Analysts should compare this rate with the prevailing rates for similar maturities and credit ratings to determine if Rithm is paying a premium or if the rate is in line with market trends.

Furthermore, the decision to issue notes without registration rights suggests that Rithm is leveraging the private placement market. This move can be advantageous for companies seeking to raise capital more quickly and with fewer disclosure requirements than public offerings. However, it's important to consider the broader market implications, such as investor appetite for private placements and the potential impact on Rithm's liquidity and capital structure.

Investors should also assess the overall corporate bond market's health, particularly in the context of economic cycles, interest rate forecasts and inflationary pressures. These factors can significantly influence the demand for and pricing of corporate debt offerings like the one Rithm is conducting.

NEW YORK--(BUSINESS WIRE)-- Rithm Capital Corp. (NYSE: RITM; “Rithm” or the “Company”) announced today that it has priced its previously announced offering of $775 million aggregate principal amount of 8.000% senior unsecured notes due 2029 (the “notes”). The Company intends to use a portion of the net proceeds from this offering for the reduction of indebtedness, including in connection with the Company’s tender offer for up to $275 million aggregate principal amount of its 6.250% senior unsecured notes due 2025, with the remainder of the net proceeds to be used for general corporate purposes. The notes will not have any registration rights.

The offering is expected to close on March 19, 2024, subject to customary closing conditions.

The notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration. Accordingly, the notes are being offered and sold only to, in the United States, persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and, outside the United States, in reliance on Regulation S under the Securities Act.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

ABOUT RITHM CAPITAL

Rithm Capital (NYSE: RITM) is a global asset manager focused on real estate, credit and financial services. Rithm makes direct investments and operates several wholly-owned operating businesses. Rithm’s businesses include Sculptor Capital Management, Inc., an alternative asset manager, as well as Newrez LLC and Genesis Capital LLC, leading mortgage origination and servicing platforms. Rithm seeks to generate attractive risk-adjusted returns across market cycles and interest rate environments. Since inception in 2013, Rithm has delivered approximately $5.0 billion in dividends to shareholders. Rithm is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City.

FORWARD-LOOKING STATEMENTS

This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the Company’s ability to complete the offering, the intended use of proceeds of the offering and the expected closing date of the offering. Forward-looking statements are not historical in nature and can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “continue,” “intend,” “should,” “would, “could,” “goal,” “objective,” “will,” “may,” “seek,” or similar expressions or their negative forms. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Rithm does not assume any duty or obligation (and does not undertake) to update or supplement any forward-looking statements. Because forward-looking statements are, by their nature, to different degrees, uncertain and subject to numerous assumptions, risks and uncertainties, actual results or future events, circumstances or developments could differ, possibly materially, from those that Rithm anticipated in its forward-looking statements, and future results and performance could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the section entitled “Risk Factors” in Rithm’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC, and other reports filed by Rithm with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The list of factors presented here is not, and should not be, considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240305494718/en/

Investor Relations

(212)-850-7770

ir@rithmcap.com

Media

Jon Keehner / Sarah Salky / Erik Carlson

Joele Frank, Wilkinson Brimmer Katcher

(212)-355-4449

ritm-jf@joelefrank.com

Source: Rithm Capital Corp.

FAQ

What is the ticker symbol for Rithm Capital Corp.?

The ticker symbol for Rithm Capital Corp. is RITM.

What is the purpose of the $775 million senior unsecured notes offering by Rithm Capital Corp.?

The offering aims to reduce indebtedness and fund general corporate purposes.

When is the expected closing date for the notes offering by Rithm Capital Corp.?

The offering is anticipated to close on March 19, 2024.

Who are the targeted buyers for the notes offering by Rithm Capital Corp.?

Qualified institutional buyers in the U.S. and international buyers under Regulation S are the targeted buyers for the notes offering.