New York, August 22, 2016 -- Moody's Investors Service affirmed OneMain Holdings, Inc.'s
("OneMain Holdings") B3 corporate family rating, Springleaf
Finance Corporation's ("Springleaf Finance") B3 senior
unsecured ratings, and OneMain Financial Holdings, LLC's
("OneMain Financial") B2 senior unsecured ratings, and
changed the rating outlook to positive from stable.
All of the ratings below have been affirmed with the outlook changed to
Positive from Stable:
Issuer: AGFC Capital Trust I
...BACKED Pref. Stock Preferred Stock,
Caa2 (hyb)
Issuer: OneMain Financial Holdings, LLC
...Senior Unsecured Regular Bond/Debenture,
B2
Issuer: OneMain Holdings, Inc.
...Corporate Family Rating , B3
...Junior Subordinated Shelf, (P)Ca
...Subordinate Shelf, (P)Caa3
...Senior Unsecured Shelf, (P)Caa2
Issuer: Springleaf Finance Corporation
....Issuer Rating, B3
....Senior Unsecured Regular Bond/Debenture,
B3
....Senior Unsecured Medium-Term Note
Program, (P)B3
....Senior Unsecured Shelf, (P)B3
....Subordinate Shelf, (P)Caa1
....Junior Subordinate Shelf, (P)Caa2
....BACKED Senior Unsecured Regular Bond/Debenture,
B3
RATINGS RATIONALE
The rating affirmation with a positive outlook reflects the substantial
progress the company has made de-leveraging and improving its liquidity
profile subsequent to its acquisition of OneMain Financial in November
2015. Moody's expects that the company will further deleverage
through earnings retention.
OneMain Holdings' capitalization, measured as tangible common
equity to tangible managed assets, improved to 6.5%
at 30 June 2016 from 3.2% at 31 December 2015, the
first reported period after the acquisition of OneMain Financial.
While post-acquisition deleveraging was primarily achieved through
one-time gains not related to core operations, Moody's
expects the company's future improvement in capitalization to occur
through earnings retention, given the strength of the company's
core earnings. Excluding acquisition-related charges,
which will substantially decline in 2017, OneMain Holdings'
six-month annualized pre-tax return measured approximately
4% as of 30 June 2016.
Since the acquisition, OneMain Holdings has significantly strengthened
its liquidity and funding profile by substantially reducing its debt maturity
concentration in 2017, as well as by increasing the availability
under its credit facilities and extending their maturities. As
of 30 June 2016, OneMain had $4.4 billion of undrawn
conduit capacity and $3.4 billion of unencumbered consumer
loans, which translates into a borrowing capacity of approximately
$3 billion. OneMain's unsecured debt maturities now
amount to $375 million in 2016 and $1.3 billion in
2017, a substantial improvement from $1.9 billion
of 2017 maturities at the time of the acquisition closing. We believe
the company would be able to extinguish these obligations with its cash
on hand and borrowings under its conduit facilities even if it did not
access capital markets for refinancing.
OneMain Holdings' ratings may be upgraded if: 1) OneMain continues
its progress toward de-leveraging through earnings retention,
without a deterioration in liquidity or asset quality; 2) the integration
of OneMain Financial is executed well; and 3) the strengthening of
OneMain Holdings' credit profile is evenly distributed between its two
main operating entities, Springleaf Finance and OneMain Financial.
Springleaf Finance's and OneMain Financial's ratings will be closely aligned
with those of OneMain Holdings and, therefore, would likely
be upgraded together with the ratings of the holding company.
Negative rating pressure could develop on OneMain Holdings' ratings as
a result of weak performance, or if its liquidity meaningfully deteriorates.
In addition, negative rating pressure could develop on OneMain Financial's
ratings if its leverage increases substantially, or if the structural
protections afforded to it through its debt indenture covenants were weakened
and no longer provided the credit protection they do today.
The principal methodology used in these ratings was Finance Companies
published in October 2015. Please see the Ratings Methodologies
page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Anna Sherbakova
Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653