New York, September 27, 2018 -- Moody's Investors Service ("Moody's") affirmed
OneMain Holdings, Inc.'s ("OneMain Holdings")
corporate family rating and Springleaf Finance Corporation's senior unsecured
debt rating at B1, and revised the outlook on the ratings to positive
from stable.
Affirmations:
..Issuer: OneMain Holdings, Inc.
.... Corporate Family Rating, Affirmed
B1, Positive From Stable
....Senior Unsecured Shelf, Affirmed
(P)B3
....Subordinate Shelf, Affirmed (P)Caa1
....Junior Subordinate Shelf, Affirmed
(P)Caa2
..Issuer: Springleaf Finance Corporation
.... Issuer Rating, Affirmed B1,
Positive From Stable
....Senior Unsecured Regular Bond/Debenture,
Affirmed B1, Positive From Stable
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)B1
....Senior Unsecured Shelf, Affirmed
(P)B1
....Subordinate Shelf, Affirmed (P)B2
....Junior Subordinate Shelf, Affirmed
(P)B3
..Issuer: AGFC Capital Trust I
....Preferred Stock, Affirmed B3 (hyb),
Positive From Stable
Outlook Actions:
..Issuer: OneMain Holdings, Inc.
....Outlook, Changed To Positive From
Stable
..Issuer: Springleaf Finance Corporation
....Outlook, Changed To Positive From
Stable
..Issuer: AGFC Capital Trust I
....Outlook, Changed To Positive From
Stable
RATINGS RATIONALE
The revision of the outlook to positive from stable reflects the company's
strong financial performance -- its solid profitability, continued
deleveraging, and improvement to its liquidity and funding profile.
OneMain Holdings' capitalization, measured as tangible common equity
to tangible assets, improved to 9.3% at 30 June 2018
from 8.1% at year-end 2017. Moody's
expects the company to continue to build its capital through earnings
retention and achieve tangible capitalization of 10% by the end
of 2018.
In the first half of 2018, OneMain Holdings generated $131
million of earnings, which translated into an annualized return
on average total assets (ROA) of 1%. Adjusted for a one-time,
non-cash incentive compensation expense of $106 million,
which was non-tax deductible, OneMain's after-tax
return was 2%. Moody's expects the company to generate
ROA of at least 2% going forward.
OneMain Holdings has continued to strengthen its liquidity and funding
profile by prepaying and further laddering debt maturities, as well
as by increasing the availability under its credit facilities and extending
their maturities. As of 30 June 2018, the company had $5.4
billion of undrawn conduit capacity and approximately $6.2
billion of unencumbered consumer loans, which translates into a
borrowing capacity of approximately $5 billion.
OneMain Holdings' corporate family rating could be upgraded if the company
1) continues its progress toward de-leveraging through earnings
retention by achieving a ratio of tangible common equity to tangible managed
assets in excess of 10%; 2) demonstrates consistently strong
earnings with an average annual return on assets of at least 2%;
3) continues to maintain a strong liquidity profile with ample availability
under its warehouse facilities and balanced debt maturities; and
4) demonstrates conservative financial policy.
OneMain Holdings' outlook could be revised to stable if its future earnings
prove to be weaker than anticipated, which would delay further deleveraging.
OneMain Holdings' corporate family rating could be downgraded if
its financial performance meaningfully deteriorates, resulting in
financial losses and equity erosion. The corporate family rating
could also be downgraded if the company decides to pursue an aggressive
financial policy through capital distributions or increased leverage,
which would reduce its tangible common equity to less than 8% of
managed assets, or if it demonstrates an increase in risk appetite,
as evidenced by large acquisitions or loosened underwriting criteria.
The principal methodology used in these ratings was Finance Companies
published in December 2016. Please see the Rating 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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Ana Arsov
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653