New York, February 11, 2019 -- Moody's Investors Service ("Moody's") upgraded
OneMain Holdings, Inc.'s ("OneMain Holdings") corporate family
rating and Springleaf Finance Corporation's senior unsecured debt rating
to Ba3 from B1. The outlook is stable.
Moody's has also withdrawn the outlooks on all of OneMain Holdings,
Springleaf Finance Corporation, and AGFC Capital Trust I's existing
instrument ratings for its own business reasons. Over the course
of the year, Moody's will be withdrawing all instrument level outlooks
for entities rated under the Finance Companies Rating Methodology.
Please refer to the Moody's Investors Service's Policy for Withdrawal
of Credit Ratings, available on its website, www.moodys.com.
Upgrades:
..Issuer: OneMain Holdings, Inc.
.... Corporate Family Rating, Upgraded
to Ba3 from B1
....Senior Unsecured Shelf , Upgraded
to (P)B2 from (P)B3
.... Subordinate Shelf, Upgraded to
(P)B3 from (P)Caa1
.... Junior Subordinate Shelf, Upgraded
to (P)Caa1 from (P)Caa2
..Issuer: Springleaf Finance Corporation
.... Issuer Rating, Upgraded to Ba3
from B1
.... Senior Unsecured Regular Bond/Debenture,
Upgraded to Ba3 from B1
.... Senior Unsecured Medium-Term Note
Program, Upgraded to (P)Ba3 from (P)B1
.... Senior Unsecured Shelf, Upgraded
to (P)Ba3 from (P)B1
.... Subordinate Shelf, Upgraded to
(P)B1 from (P)B2
.... Junior Subordinate Shelf, Upgraded
to (P)B2 from (P)B3
..Issuer: AGFC Capital Trust I
....Pref. Stock, Upgraded to
B2 (hyb) from B3 (hyb)
Outlook Actions:
..Issuer: OneMain Holdings, Inc.
....Outlook, Changed To Stable From
Positive
..Issuer: Springleaf Finance Corporation
....Outlook, Changed To Stable From
Positive
..Issuer: AGFC Capital Trust I
....Outlook, Changed To Stable From
Positive
RATINGS RATIONALE
The upgrade of the corporate family rating to Ba3 from B1 reflects a significant
progress OneMain Holdings has made in deleveraging, improving its
liquidity profile, and achieving strong profitability since the
acquisition of OneMain Financial Holdings, LLC in November 2015.
OneMain Holdings met its deleveraging target of debt to adjusted tangible
equity of 7x (equivalent to Moody's definition of tangible common
equity to tangible managed assets of 10%) by year-end 2018
and has announced that it plans to commence capital distributions in March
2019. At 31 December 2018, OneMain Holdings' debt to
adjusted tangible equity leverage ratio stood at 6.9x, equivalent
to Moody's definition of tangible common equity to tangible managed
assets of 10.9%. With the announced annual dividend
of $1.00 per share, OneMain Holdings' planned
annual distributions will amount to approximately $136 million,
which would represent 25% of its 2018 normalized earnings,
allowing the company to continue to build up its capital through earnings
retention.
In 2018, OneMain Holdings generated earnings of $447 million.
Adjusted for a one-time, non-cash incentive compensation
expense of $106 million, which was non-tax deductible,
its earnings would have been $553 million, representing a
strong return on average assets of 2.7%. Moody's
expects the company to generate return on average assets of at least 2.5%
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 31 December 2018, the company had
$6 billion of undrawn conduit capacity, underpinned by approximately
$7.6 billion of unencumbered consumer loans.
OneMain Holdings' corporate family rating could be upgraded if the company:
1) demonstrates consistently strong earnings with an annual return on
assets of at least 2.5%; 2) demonstrates conservative
financial policy, while continuing to build up capital through earnings
retention; and 3) continues to maintain a strong liquidity profile
with ample availability under its warehouse facilities and balanced debt
maturities.
OneMain Holdings' corporate family rating could be downgraded if:
1) its financial performance meaningfully deteriorates, resulting
in financial losses and equity erosion; 2) the company decides to
pursue an aggressive financial policy through capital distributions;
3) the company increases leverage, which would reduce its tangible
common equity to less than 10% of tangible managed assets;
and 4) 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 2018. 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
