CCM to issue $500M in senior notes as Two Harbors deal nears closing

CrossCountry Intermediate Holdco (CCM) is expected to issue $500 million of senior unsecured notes, coinciding with the projected August closing of its Two Harbors Investment Corp. acquisition.

Fitch Ratings said it expects to rate the issuance at ‘BB-(EXP)’, ranking pari passu with existing senior unsecured debt. Proceeds are expected to be used to repay mortgage servicing rights (MSR)-backed facilities that will be drawn to fund the transaction.

The credit ratings agency estimates corporate leverage for CCM will increase to 2.4x after the acquisition, up from 1.2x in the second quarter of 2026 and exceeding its downgrade trigger of 1.5x.

“However, retained earnings growth should reduce leverage toward the company’s 1.0x target over the medium term,” Fitch said. “Negative rating action could result from an inability to reduce corporate leverage to 1.5x or below over the rating outlook horizon.”

Analysts expected CCM to raise debt to proceed with the Two Harbors deal, valued at $1.26 billion, flagging rising leverage as an integration challenge as well as the complex task of bringing a large servicing portfolio in-house.

A shift from secured to unsecured debt, however, is viewed as credit positive because it frees up collateral and strengthens liquidity, analysts added.

CCM told HousingWire previously that “while leverage will temporarily increase following the transaction, it’s important to view that in the context of a significantly larger and more cash-generative business.”

“The combined company will benefit from substantially higher recurring servicing cash flows, a larger MSR portfolio and meaningful synergy opportunities, all of which support rapid deleveraging over time,” the company added.

Two Harbors will bring a $159 billion portfolio to CCM’s $202 billion as of the first quarter, according to Inside Mortgage Finance. The deal pushes the lender from the No. 15 spot to No. 8 among the largest servicers by owned portfolios.

According to Fitch, Two Harbors will further enhance CCM’s business profile by growing its servicing portfolio and enabling more profitable in-house servicing through RoundPoint Mortgage Servicing LLC, which Two Harbors acquired in 2023.

“CCM’s ratings reflect its growing distributed retail franchise, conservative debt usage, solid profitability, adequate liquidity, limited asset quality risks and well-executed growth strategy,” Fitch analysts said.

Earlier this month, Two Harbors said it had secured required state and agency approvals from all but one state for its planned sale to CCM.

This article was written by Flávia Furlan Nunes and generated with the assistance of HousingWire Automation, then reviewed by a HousingWire editor before publication.