S&P Global Ratings expects most rated U.S. finance companies in 2021 to face continued challenges related to COVID-19 and perhaps tighter regulation, but to generally navigate through such obstacles. We expect they'll benefit from a rebounding economy, good balance sheet management, and active funding markets.

In their base case, S&P Global economists expect the U.S. economy to grow a modest 4.2% in 2021 after contracting an estimated 3.9% in 2020, with GDP reaching its pre-pandemic level sometime around the third quarter. However, they see downside risk to that forecast and do not expect the unemployment rate to fall to its pre-pandemic level until 2024.

Under those conditions, and at least until vaccines reach wide distribution, finance companies are likely to see difficulties in areas including leveraged lending and commercial real estate (CRE) lending, consumer loans, money transfer, and student lending resulting from social distancing or longer-term secular changes. These will likely lead to rising charge-offs and some need to continue allocating provisions for loan losses in 2021. They will also limit revenue and earnings improvement.

Mortgage companies, which benefited from a surge in origination volumes linked to low rates in 2020, will likely see lower volumes in 2021. Consumers lenders, which, to an extent, staved off asset quality problems thanks to forbearance and eviction moratoriums in 2020, may have to grapple with delayed asset problems this year.

On top of that, the incoming Biden Administration and a Democrat-controlled Congress increase the odds of tighter regulation and enforcement in some areas. Most notably, we believe President-elect Joe Biden could appoint a new head of the Consumer Financial Protection Bureau, who may take a more aggressive approach. He and Democrats in Congress may also push for a higher corporate tax rate, which if successful, could ultimately eat somewhat into earnings.

Nevertheless, we expect the improvement in operating conditions that commenced around last summer for finance companies--characterized by open funding markets, higher asset prices, and reduced asset quality stress--to continue in 2021. We also expect most finance companies to defensively manage their balance sheets. Therefore, while roughly one-third of our ratings on finance companies have negative outlooks, we expect fewer negative rating actions this year than last. In fact, negative actions have subsided greatly since around August 2020 after a flurry of downgrades and outlook changes after the onset of the pandemic.

Regulation And Litigation: New Sheriff In Town, But Let's Not Panic

Key credit drivers

Not so final: Consumer lending.  Despite being recently "finalized," the Payday, Vehicle Title, and Certain High-Cost Installment Loans rules could be revisited by a reinvigorated CFPB. The most likely revisions could focus on the amendments to the original rule, which rescinded rules requiring a lender to determine a borrower's ability to repay and certain underwriting, recordkeeping, and reporting requirements. Such changes would squeeze profitability, by both lowering top-line revenue and increasing operating expenses, and disrupt business models for lenders that are unable to adapt.

Not so fast: Mortgage servicing and forbearance.  We believe the Biden Administration could consider extending mortgage forbearance options created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Moreover, we expect the CFPB will closely scrutinize how servicers manage mortgages that are in forbearance, delinquent, or in foreclosure. This could lead to a revival of fines and penalties that were more common in the immediate aftermath of the global financial crisis during the Obama Administration.

Not done yet: Student loans.  In December, then U.S. Secretary of Education Betsy DeVos extended student loan forbearance through Jan. 31, 2021. This also includes the pause in interest accrual and the suspension of collections.

What to look for over the next year

Who's the boss?  Knowing who the Biden Administration appoints to key cabinet and agency leadership positions will tell us a lot about policy goals for the next four years. Although exiting CFPB Director Kathy Kraninger's term does not end until December 2023, she is removable at will following the Supreme Court's ruling on Seila Law LLC v. CFPB last summer. Also, we expect the Biden Administration's nomination for Secretary of Education will influence the landscape for student loan originators and servicers.

Residential Mortgage: As Good As It Gets?

Key credit drivers

How low (can the 30-year) go?  Falling interest rates over the last year led to a staggering amount of originations and higher gain-on-sale margins, which resulted in substantial EBITDA growth. At the time of this publication, the 30-year rate has hit an all-time low of 2.67%. If a successful rollout of the vaccine results in a rally in mortgage rates, we could see a return to normal as early as the second half of 2021. The Mortgage Bankers Assn. (MBA) expects originations to decline to a still very robust $2.75 trillion (from $3.57 trillion in 2020) with an average interest rate of 3.2% for 2021. S&P Global expects the 30-year rate to be 3.0% in 2021 and 3.2% in 2022.

Volatility is the constant in residential mortgage.  Volatility is inherent in this business, especially with mortgage volume, gain on sale margins, and, ultimately, EBITDA. An issuer's ability to manage through this volatility has a lot to do with the strength of its platform, as well as how effective management is at taking advantage of better economic conditions. Issuers that were proactive in strengthening funding and deepening access to capital markets will likely see these initiatives pay dividends when the origination market inevitably contracts.

Forbearance: A dark spot in an otherwise bright year.  While issuers we rate are not generally exposed to credit risk on the loans they originate and service, rising forbearance increases liquidity needs from servicing. If the rise in forbearance results in increased foreclosures, this would also mean higher costs to service. Forbearance overall is 5.53% of total loans, with Fannie Mae and Freddie Mac loans at 3.19%, Ginnie Mae loans at 7.85%, and private-label service and other loans at 8.77% (as of Jan. 3). Forbearance is down from the June 2020 peak of overall forbearance of 8.55%, but still significantly above pre-COVID-19 levels.

What to look for over the next year

Gain-on-sale margins: What goes up must come down.  Profits are quite literally "earned" in the highly competitive mortgage market. We monitor gain-on-sale margins as indications of market competition. When they widen, there is plenty of volume to go around. When they tighten, competition is heightened and originators are competing for share. There were more than enough originations to go around during 2020, resulting in broad widening of gain-on-sale margins. We expect they'll contract this year as originations decrease and market participants jostle to retain market share.

Normalization of leverage from artificial lows.   We expect contractions in originations and gain-on-sale margins to result in increases in our debt to adjusted EBITDA leverage metric in 2021. However, these will be off record-low leverage for many of our issuers in 2020. Leverage in 2021 will also be affected by debt raises that occurred in 2020 and that may continue into 2021.

Auto Lending: Credit Has Been Resilient, But Macro Headwinds Remain Heading Into 2021

Key credit drivers

Credit quality.  Significant credit deterioration did not materialize for auto lenders we rate during 2020. Unemployment insurance, stimulus, and forbearance likely played a significant part in keeping delinquencies stable. The Federal Deposit Insurance Corp. (FDIC) reported net charge-offs for auto loans of 0.32% of average balances for the third quarter of 2020, the lowest quarterly charge-off since the FDIC began reporting this statistic in the first quarter of 2011. Similarly, the Federal Reserve Bank of New York reported auto loans entering 30+ day delinquencies were 5.9% of balances, the lowest since they began reporting the data in 2003. Although delinquencies rose in the second half of the year, they remain well under what we would expect given 6.7% unemployment currently, and peak unemployment above 10% during 2020. We remain vigilant of possible credit deterioration in the first half of 2021, particularly if there are further macro headwinds due to a slower-than-expected decrease in unemployment.

Funding.  During March through May 2020, there was some instability in the auto ABS market, but issuers we rate were able to issue in the ABS market in June. Although spreads were wider than normal, falling benchmark rates meant that issuers were able to tap the ABS market at normal rates in June. By September, spreads normalized while benchmark rates remained at record lows, resulting in a near historic low cost of funding.

Key assumptions

Modest deterioration in credit.  We expect an increase in delinquencies in 2021, with peak charge-offs during mid- to late-2021.

Continued capital market access.  We expect our rated issuers will be able to continue to issue in the ABS market at attractive rates throughout 2021. We expect costs of funding to go up as the economy recovers and benchmark rates rise.

Recovery in originations.  We expect originations to recover, particularly in mid- to late-2021. This will be dependent on the pace of economic recovery and could result in modest increases in leverage.

What to look for over the next year

The outlooks on all of the entities we rate in the auto lending sector are negative.

Credit quality.  We will be vigilant of deterioration in credit quality if the macro recovery is slower than expected. Increases in delinquency in the first half of the year could indicate a wave of charge-offs to come, with more risk for subprime lenders than captives.

Used-car prices.  Net charge-offs have been aided by improving recoveries from better-than-expected used-car values starting in the third quarter. But if used-car prices decline in 2021, and credit deteriorates at the same time, loss given default could increase for lenders. Lower car prices would also have a meaningful impact on losses from leases for captive lenders.

Student Lending: Forbearance Transition Better Than Expected, Loan Forgiveness Still Making Headlines

Key credit drivers

Transition from forbearance better than expected.  Issuers we rate holding private student loans and Federal Family Education Loan Program (FFELP) loans saw forbearance decrease 50%-75% from peak levels by the end of the third quarter. Forbearance is now approaching pre-COVID-19 levels without a material increase in delinquencies and charge-offs so far. Headwinds from macro deterioration could pose risks to credit quality, particularly in the first half of 2021.

Loan forgiveness makes headlines, while regulatory reform seems unlikely.  Current headlines around loan forgiveness seem to push for one-time loan forgiveness as stimulus via executive order without the need for congressional action. This has many hurdles, in our view, given potential moral hazard. This could take market share away from private lenders on the margin as consumers may be skewed to federal loans by potential future forgiveness, though a large portion of borrowers of private student debt have either exceeded their limits on public borrowing or earn enough income to be excluded from potential forgiveness. Another impact from forgiveness could be materially decreasing the federal student loan servicing portfolio.

Key assumptions

No expected impact from loan forgiveness or regulatory changes in the next year.   The current administration has not highlighted student lending reform as a key issue as much as forgiveness, and given divisions in Congress, we think any meaningful reform in student lending is unlikely next year. Although forgiveness is more likely, it is difficult to predict specific criteria for one-time forgiveness.

No implementation of a single servicer for federal loans in 2021.  We do not currently anticipate a loss of revenue in 2021 for issuers that have exposure to the federal student loan servicing business, as this becomes increasingly difficult to predict.

What to look for over the next year

The outlooks on all of the entities we rate in the student lending sector are negative.

Single federal loan platform enters third presidential administration.  After many starts and stops, the transition to a single federal servicing platform continues. This is likely not going to be a priority of the incoming administration, further increasing uncertainty on when the transition will actually happen. This creates a lot of uncertainty for servicers such as Navient and Nelnet, on top of the risks of the servicing portfolio shrinking from potential forgiveness.

Health of the consumer.  Cedit quality has been better than expected so far through the transition away from peak forbearance, but this could change if economic conditions deteriorate. We will look to delinquencies to signal further deterioration in the first half of the year as consumers get further away from exiting forbearance.

Fleet Management And Leasing: Built For The Tough Terrain

Key credit drivers

Resilient leverage in the face of COVID-19 stress.   Fleet Management was one of the few industries that had a decline in leverage through the stress. Amortizing and match-funded securitizations performed as planned, shrinking after years of growth with negligible consequences to earnings or equity. EBIT coverage improved due to lower interest rates and stable pricing.

Flat revenue but stable earnings.  The COVID-19 pandemic caused many fleet management and leasing customers to pause new vehicle purchases and extend the life of existing vehicles. Although revenue for our issuers was mostly flat, earnings were largely intact and, for some issuers, grew. Balance sheet assets, which are mostly leasing assets, were flat or slightly shrank because of decreased lease demand.

Pause in favorable ABS pricing despite stellar credit performance.   Overall ABS issuance slowed in April to June as pricing widened for all asset classes. We believe the temporary gap in favorable pricing and funding is illustrative of the risks of the industry's relative reliance on the securitization market. At the same time, however, the fleet management and leasing industry continued to report negligible credit losses on leased vehicles because of strong underwriting and open-end leases which shift residual value risk to customers.

What to look for over the next year

The outlooks on all of the entities we rate in the fleet leasing sector are stable.

Demand delayed or gone?  In 2021, we are watching to see how new vehicle demand responds following a year when customers decided to hold off on new purchases and extend the life of existing fleet vehicles. Since most fleet vehicles tend to be critical to the business operations, we expect new fleet demand to perform modestly stronger than our GDP forecasts.

Money Exchange And Payment Services: Defensively Positioned For Good Reason

Key credit drivers

Higher cash balances lower net debt.  Many of the companies we rate were able to build surplus cash during the stress because of less working capital needs and curbs to stock buybacks, which lowered net debt figures.

Revenue diversity and cost controls mitigate stress.  Although operating results were challenged in the industry, revenue diversity, cost cutting, and variable expenses led to better-than-expected results, all else equal.

What to look for over the next year

Further lockdowns and economic activity.  We view the money exchange and payment services industry as highly correlated to travel and economic activity. Although many of the companies we rate have taken proactive measures, a protracted pandemic will invariably erode such defensive measures. We will be particularly interested in the GDP trends of the U.S. and European markets, where issuers are most exposed. The World Bank expects global consumer-to-consumer remittances to fall to $619 billion in 2021 from $666 billion in 2020 and $714 billion in 2019.

Opportunistic mergers and acquisitions.  We think issuers with stronger balance sheets and greater earnings visibility could consider opportunistic acquisitions of weaker operators. Larger acquisitions could lead to negative rating or outlook actions.

Regulation and law.   We are watching a handful of legal challenges in 2021 whose outcomes could affect leverage. As part of Moneygram's deferred prosecution agreement (DPA), the company has an independent compliance monitor in place until May 2021, which could be extended if the Department of Justice believes lapses in internal controls have not been properly remediated. Western Union's DPA was formally dismissed in March 2019. The Federal Trade Commission's lawsuit against Fleetcor alleging it charged customers at least hundreds of millions of dollars in hidden fees is also ongoing.

Consumer Lending: Modest Growth In Origination Volume For Personal Loans And Potential Rise In Delinquencies

Key credit drivers

The economic rebound.  The coronavirus pandemic led to deterioration in economic conditions in the U.S. S&P Global economists expect U.S. GDP to modestly grow by 4.2% in 2021 after contracting 3.9% in 2020. We think the contraction in GDP will have an exacerbated effect on lower-income workers who are more likely to use consumer lending products.

Trend in delinquencies and charge-offs.  With the expiration of CARES Act provisions and voluntary payment deferment programs offered by lenders, we could see delinquencies and net charge-offs rise in 2021. We expect consumer finance companies have already made adequate provisions for potential credit losses.

Liquidity.  At the onset of the pandemic, we saw companies draw on their credit facilities to maintain adequate liquidity for ongoing operations. We expect most consumer finance companies will not face liquidity issues since they can scale back originations and draw on their credit facilities, if needed.

Key assumptions

Lower unemployment and higher demand.  S&P Global economists expect the unemployment rate to decline to 6.4% in 2021 from 8.3% in 2020. Also, we expect consumer demand for loans to rise modestly as additional liquidity from stimulus dwindles in the second half of 2021.

Economic growth.  S&P Global economists expect real GDP to grow 4.2% in 2021 after a 3.9% decline for 2020. We expect the recovery will be slower for economic cohorts that rely on less steady sources of income, which could boost demand for consumer lending products.

Access to markets.  With increased investor appetite and the Fed's plan to keep interest rates low until 2023, companies are likely to have continued access to capital markets.

What to look for over the next year

New administration could lead to new regulatory hurdle.  The Biden Administration could make regulatory changes, which could affect the lending strategies of consumer financing companies--specifically payday lenders that charge a triple-digit annual percentage rate (APR). In 2020, Nebraska and Virginia capped personal loan interest at 36% APR plus fees, following California's similar rule passed in 2019. We could see some federal regulations or other states pass similar initiatives.

Trends in charge-offs and delinquencies.  While we expect lenders to gradually increase originations in 2021, we remain cautious about a potential rise in charge-offs and delinquencies as government stimulus and temporarily forbearance programs end.

Potential shift in portfolio mix.  As the economy slowly recovers, we expect lenders to remain selective in originations by shifting their portfolio mix either toward less risky customers or more secured lending. According to TransUnion, for third-quarter 2020, total unsecured balance decreased to $151 billion from $156 billion in third-quarter 2019, and loans 60+ days delinquent declined to 2.53% from 3.28%.

Debt repurchases.  Reduced originations and rise in repayments led to higher-than-normal cash on balance sheet. The companies used excess cash to make dividend payments or debt repurchases, often at prices significantly below par. If a company repurchases debt at distressed levels, we typically view it as a de facto restructuring that is tantamount to a default.

BDCs And Leveraged Lending: Obstacles Remain

Key credit drivers

The strength of the economy.  Credit losses generally spike during and immediately following recessions. Leveraged loan performance is closely linked to the economic cycle, and asset quality is a key determinant of credit quality for BDCs and other leveraged loan providers.

Competition and underwriting standards.  The competitive environment influences underwriting standards, which, in turn, drive asset quality. The demand for private credit investments and the emergence of direct lending as an asset class is a secular trend that has intensified competition, in our view. We believe lenders have temporarily adopted a more defensive posture.

Financing conditions.  Financing conditions influence the ability of wholesale funded nonbank financial institutions to obtain funding for growth and refinance maturing borrowings and credit facilities, as well as the cost and terms of funding. Also, weakening financing conditions may stress liquidity needed for unfunded commitments, such as undrawn revolvers and underwriting commitments.

Interest rates.  Low interest rates aid borrowers' ability to service their debt, reducing the probability of default. Also, to the extent that lenders incorporate floors on floating-rate loans, declining rates can enhance net interest margins for lenders.

Key assumptions

The economy slowly recovers and GDP returns to precrisis levels in the third quarter of 2021.  We currently forecast real GDP to grow 4.2% in 2021 after a 3.9% in decline for 2020, with a 25%-30% risk of recession. S&P Global Ratings Research forecasts that the U.S. trailing-12-month speculative-grade corporate default rate will increase to 9.0% by September 2021 compared with 6.3% as of September 2020.

The Fed Funds rate remains near zero.  We expect the Fed to hold the fed funds policy target rate near zero for the next three years.

Access to markets.  As the economy slowly recovers and with interest rates expected to remain low, we could see companies accessing the unsecured and secured markets to lower their cost of funding and push out their debt maturities, as seen with a couple of our rated BDCs in early 2021.

What to look for over the next year

Asset quality.  Even as the economy slowly recovers, the trailing default rate may rise, but losses may vary among issuers depending on industry exposures, underwriting quality, and concentrations. Loans on nonaccrual status and payment-in-kind (PIK) income are expected to be higher at the start of the year before normalizing as the economic recovery gains traction.

Earnings.  We expect elevated loans on nonaccrual status and realized losses in the wake of the pandemic. These factors, along with elevated PIK income, could weigh on key earnings metrics for BDCs that we rate, including non-deal-dependent income coverage of interest and dividends, and realized return on portfolio investments.

Leverage.  We will monitor the extent to which lenders potentially increase leverage in 2021, with 1.0x debt to adjusted total equity (ATE) being a key threshold, particularly for BDCs.

Liquidity.  While we do not anticipate the calls on liquidity that many experienced in the spring of 2020 to meet unfunded commitments, we will continue to monitor how companies manage potential liquidity needs for unfunded revolvers and underwriting commitments.

CRE Finance Companies: Full Impact From The Pandemic Remains Unknown

Key credit drivers

The strength of the economy.  CRE is cyclical and closely linked to the health of the economy, and asset quality is a key determinant of credit quality for CRE finance companies. If the vaccine rollout is slow, or the extraordinary fiscal stimulus we saw in 2020 abates, we would expect significant downside risks to our current base-case expectations.

Financing conditions.  Financing conditions have been largely supportive thus far with secured and unsecured issuance in the public market. However, most of the rated CRE finance companies utilize secured repurchase facilities, which come with significant margin call risk. While companies can negotiate different terms with their bank lenders, most saw margin calls on CRE securities (spread-mark exposure) and were able to either pay down debt or negotiate a margin call holiday on affected transitional loans (credit-mark exposure).

Interest rates.  We think the Federal Reserve is unlikely to raise its benchmark interest rates anytime soon. We look for the accommodative stance from the Fed to remain as it has guided toward a higher tolerance for inflation.

Key assumptions

Slow economic recovery in 2021.  Our economists currently expect 4.2% real GDP growth in 2021 and estimate the risk of recession in the next 12 months at 25%-30%.

Interest rates remain low in 2021.  We expect the Fed to remain supportive and committed to low interest rates through 2021. The Fed's guidance toward a higher tolerance for inflation leads us to assume it would likely hold off raising rates until mid-2024.

What to look for over the next year

The outlooks on all of the entities we rate in the commercial real estate sector are negative.

Quality of loan portfolios.  Many CRE lenders saw increases in provisions for credit losses in 2020. Much of the impact has been limited to the hotel and retail sectors. Many CRE lenders worked with property sponsors to inject capital or modify loan payments to aid during these difficult times, which we view as critical given the transitional nature of the loans. Severe risks and uncertainties remain as the pandemic continues.

Long-term CRE impact.  The multifamily and office sectors could show longer-term stress if working from home and related population shift away from larger cities remains even after the pandemic is largely subdued. We have already seen a significant decline in multifamily rents in cities such as New York and San Francisco, while office properties typically have longer leases and are likely to see stresses emerge slowly.

Financing conditions.  CRE lenders took advantage of supportive financing conditions in 2020 to increase much needed liquidity should margin call risk materialize in 2021. Many lenders paid down debt or negotiated margin call holidays, mostly on troubled retail and hotel loans backed by repo facilities. We have not yet seen many of these margin-call holidays expire, and currently the focus has largely been on hotel and retail property loans. Over the next year it will be critical to watch CRE lenders' exposure to margin calls and their ability to access the public markets for liquidity.

CRE Services: Potential Headwinds Persist As Companies Reconsider Office Space Requirements

Key takeaways

• Despite the rollout of COVID-19 vaccines, we expect fairly modest economic growth in 2021, limiting improvement in office leasing volumes and overall cash volumes for CRE service companies.
• Reconsideration of office space requirements by companies will also affect leasing, a segment that makes up about one-third of fee revenues for rated CRE service companies in aggregate.
• We also expect property transaction volumes to remain relatively weak, hurting capital markets revenues, though this could start turning around in the seasonally important second half of the year.
• CRE service companies will likely look to use in-fill acquisitions, technology enhancements, and expense management to support operating performance.
• Companies: Avison Young (Canada) Inc., CBRE Services Inc., Cushman & Wakefield, Greystar Real Estate Partners, Greystone Select, Jones Lang LaSalle Inc., Newmark Group, and Walker & Dunlop.

Key credit drivers

Revenue growth.  We expect about 30%-40% of fee revenues from recurring sources such as property and facilities management, 30%-35% from leasing, and 20%-25% from capital markets for our rated issuers. The latter two segments were severely hurt by COVID-19 throughout 2020.

Leverage management.  Despite double-digit declines in EBITDA in 2020, we expect leverage to largely remain within our thresholds for the current ratings as companies use excess cash to reduce debt. Several companies have targets to keep their net debt to EBITDA below 2.0x, a level we view favorably. Some companies have had more trouble staying within our expected ranges, which is reflected in their lower relative ratings.

Capital deployment.  While the companies have access to institutional capital and capital markets, we expect investors will likely remain on the sidelines until there is more visibility on the new normal and the widespread availability of vaccines.

Key assumptions

Revenue growth to be driven by recurring fee stream in 2021.  We expect CRE service companies to focus on growing their recurring fee revenue streams of property and facilities management. Despite the rollout of COVID-19 vaccines, we expect transactional volume from leasing and capital markets to remain modest, which will lead to volatility in fee revenues from these segments.

Evolving fundamentals in 2021.  Our economists expect the U.S. economy to rebound by 4.2% in 2021 and interest rates to remain low, and we expect companies to have access to institutional capital, but fundamentals to change as companies reconsider their office space requirements.

Stable multifamily origination volume.  According to the MBA, there is about $115 billion in multifamily maturities by 2022. The MBA forecasts multifamily origination volume will gradually rise from $288 billion in 2020 to $320 billion in 2022.

What to look for over the next year

Reassessment of office space requirements.  CRE service companies will have to adapt to companies' likely transition to a hybrid model and reduced office space requirements. This will lead to a decline in transactional volume and fee revenues generated from office leasing long term. We expect the decline in office leasing to be partially offset by industrial and warehouse leasing.

Potential industry consolidation.  We expect bigger, well-positioned companies with adequate liquidity could be acquisitive, which creates the possibility of incremental leverage and execution risk.

Forbearance trends.  The Federal Housing Finance Agency has extended the forbearance option for multifamily mortgages backed by Fannie Mae and Freddie Mac to March 31, 2021. We expect servicers to maintain adequate funding facilities for these requests and liquidity to remain steady.

Appendix: Rating Component Scores

Table 1

Financial Services Finance Companies
Company	Business risk profile	Financial risk profile	Anchor	Diversification	Capital structure	Financial policy	Liquidity	Management and governance	Peer adjustment	SACP	ICR	Outlook
Commercial real estate services
Avison Young (Canada) Inc.	Fair	Highly Leveraged	b	Neutral	Neutral	Neutral	Adequate	Fair	Negative	b-	B-	Stable
CBRE Services Inc.	Satisfactory	Modest	bbb+	Neutral	Neutral	Neutral	Exceptional	Satisfactory	Neutral	bbb+	BBB+	Stable
Cushman & Wakefield	Fair	Aggressive	bb-	Neutral	Neutral	FS-5	Strong	Fair	Neutral	bb-	BB-	Negative
Greystar Real Estate Partners, LLC	Fair	Aggressive	bb-	Neutral	Neutral	Negative	Adequate	Satisfactory	Neutral	b+	B+	Stable
GreyStone Select Financial LLC	Weak	Highly Leveraged	b-	Neutral	Negative	Neutral	Less than Adequate	Fair	Neutral	b-	B-	Stable
Jones Lang LaSalle Inc.	Satisfactory	Modest	bbb+	Neutral	Neutral	Neutral	Exceptional	Satisfactory	Neutral	bbb+	BBB+	Negative
Newmark Group, Inc.	Fair	Modest	bbb-	Neutral	Neutral	Neutral	Strong	Fair	Negative	bb+	BB+	Negative
Walker & Dunlop Inc	Fair	Modest	bbb-	Neutral	Negative	Neutral	Strong	Satisfactory	Negative	bb	BB	Stable
Fleet leasing
Element Fleet Management Corp.	Satisfactory	Intermediate	bbb	Neutral	Neutral	Neutral	Adequate	Fair	Neutral	bbb	BBB	Stable
Enterprise Fleet Management Inc.	Satisfactory	Modest	bbb+	Neutral	Neutral	Neutral	Adequate	Satisfactory	Neutral	bbb+	BBB+	Stable
Wheels Inc.	Satisfactory	Intermediate	bbb	Neutral	Neutral	Neutral	Adequate	Satisfactory	Positive	bbb+	BBB+	Stable
Residential mortgage
Altisource Portfolio Solutions S.A.	Vulnerable	Highly Leveraged	b-	Neutral	Neutral	Neutral	Adequate	Weak	Neutral	b-	B-	Negative
Freedom Mortgage Corp.	Weak	Highly Leveraged	b	Neutral	Negative	Neutral	Adequate	Fair	Neutral	b-	B-	Stable
LD Holdings Group LLC	Weak	Aggressive	b+	Neutral	Negative	FS-5	Adequate	Fair	Neutral	b	B	Stable
Mr. Cooper Group Inc.	Weak	Aggressive	b+	Neutral	Negative	Neutral	Adequate	Fair	Neutral	b	B	Stable
OCWEN Financial Corp.	Vulnerable	Highly Leveraged	b-	Neutral	Negative	Neutral	Less than Adequate	Weak	Neutral	b-	B-	Negative
PennyMac Financial Services, Inc.	Weak	Significant	bb-	Neutral	Negative	Neutral	Adequate	Fair	Neutral	b+	B+	Stable
Provident Funding Associates L.P.	Weak	Aggressive	b+	Neutral	Negative	Neutral	Adequate	Fair	Negative	b-	B-	Positive
Quicken Loans Inc.	Fair	Intermediate	bb+	Neutral	Negative	Neutral	Strong	Fair	Neutral	bb	BB	Stable
Consumer lending and payday
CCF Holdings LLC	Vulnerable	Highly Leveraged	b-	Neutral	Neutral	Neutral	Less than Adequate	Fair	Neutral	b-	CCC	Negative
CNG Holdings Inc.	Vulnerable	Significant	b+	Neutral	Neutral	Neutral	Less than Adequate	Fair	Negative	b	B	Negative
Curo Group Holdings Corp.	Vulnerable	Highly Leveraged	b-	Neutral	Neutral	Neutral	Less than Adequate	Fair	Neutral	b-	B-	Stable
Enova International, Inc.	Vulnerable	Aggressive	b	Neutral	Neutral	Neutral	Less than Adequate	Fair	Neutral	b	B	Negative
FirstCash, Inc.	Weak	Intermediate	bb	Neutral	Neutral	Neutral	Strong	Satisfactory	Neutral	bb	BB	Stable
Greensky Holdings	Vulnerable	Significant	b+	Neutral	Neutral	Neutral	Adequate	Fair	Neutral	b+	B+	Negative
TMX Finance LLC	Vulnerable	Aggressive	b	Neutral	Neutral	Neutral	Less than Adequate	Weak	Neutral	b-	B-	Stable
Student lending
Nelnet Inc.	Fair	Minimal	bbb	Neutral	Negative	Neutral	Adequate	Fair	Neutral	bbb-	BBB-	Negative
Money exchange
Euronet Worldwide Inc.	Satisfactory	Modest	bbb+	Neutral	Neutral	Neutral	Strong	Fair	Negative	bbb	BBB	Negative
FleetCor Technologies Inc.	Satisfactory	Intermediate	bbb-	Neutral	Neutral	Negative	Adequate	Fair	Neutral	bb+	BB+	Positive
MoneyGram International	Weak	Highly Leveraged	b	Neutral	Neutral	Neutral	Less than Adequate	Fair	Neutral	b	B	Negative
Western Union Co. (The)	Satisfactory	Intermediate	bbb	Neutral	Neutral	Neutral	Exceptional	Fair	Neutral	bbb	BBB	Stable
WEX Inc.	Satisfactory	Highly Leveraged	b+	Neutral	Neutral	Neutral	Adequate	Fair	Positive	bb-	BB-	Negative
Specialty finance
Blucora Inc.	Fair	Intermediate	bb+	Neutral	Neutral	Neutral	Adequate	Fair	Negative	bb	BB	Negative
Greenhill & Co., Inc.	Fair	Intermediate	bb+	Neutral	Neutral	Neutral	Adequate	Fair	Negative	bb	BB	Negative
Note: As of Jan. 15, 2021. SACP--Stand-alone credit profile. ICR--Issuer credit rating.

Table 2

NBFI Finance Companies
Company	Anchor	Entity-specific adjustment	Final anchor	Business position	Capital, leverage, and earnings	Risk position	Funding/liquidity	Comparable ratings adjustment	SACP	Group/GRE support	ICR	Outlook
Auto lending
Credit Acceptance Corp.	bb+	0	bb+	Moderate	Strong	Moderate	Adequate/Adequate	0	bb	0	BB	Negative
Commercial lending
Jefferies Finance LLC	bb+	0	bb+	Moderate	Adequate	Weak	Adequate/Adequate	0	b+	1	BB-	Negative
KKR Financial Holdings LLC	bb+	0	bb+	Moderate	Very strong	Very Weak	Adequate/Adequate	0	bb-	4	BBB	Watch neg
Oxford Finance LLC	bb+	0	bb+	Moderate	Strong	Moderate	Moderate/Adequate	0	bb-	0	BB-	Stable
Commercial real estate
Apollo Commercial Real Estate Finance, Inc	bb+	0	bb+	Moderate	Strong	Moderate	Moderate/Adequate	-1	b+	0	B+	Negative
Blackstone Mortgage Trust Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Moderate/Adequate	0	b+	0	B+	Negative
Claros Mortgage Trust, Inc	bb+	0	bb+	Moderate	Strong	Moderate	Moderate/Adequate	-1	b+	0	B+	Negative
iStar Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Adequate	1	bb	0	BB	Negative
KKR Real Estate Finance Trust Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Moderate/Adequate	1	bb-	0	BB-	Negative
Ladder Capital Finance Holdings LLLP	bb+	0	bb+	Moderate	Adequate	Adequate	Moderate/Adequate	0	bb-	0	BB-	Negative
LoanCore Capital Markets LLC	bb+	0	bb+	Weak	Moderate	Moderate	Moderate/Adequate	1	b	0	B	Negative
Starwood Property Trust Inc.	bb+	0	bb+	Moderate	Strong	Moderate	Moderate/Adequate	0	bb-	0	BB-	Negative
Consumer lending
Fairstone Financial Inc.	bbb-	0	bbb-	Moderate	Moderate	Moderate	Moderate/Adequate	0	b+	0	B+	Watch dev
goeasy Ltd.	bbb-	0	bbb-	Moderate	Strong	Weak	Moderate/Adequate	0	bb-	0	BB-	Stable
OneMain Holdings, Inc.	bb+	0	bb+	Adequate	Moderate	Moderate	Adequate/Adequate	0	bb-	0	BB-	Stable
World Acceptance Corp.	bb+	0	bb+	Moderate	Strong	Weak	Moderate/Moderate	-1	b-	0	B-	Negative
Student lending
Navient Corp.	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Adequate	0	bb-	0	BB-	Negative
Residential mortgage
New Residential Investment Corp.	bb+	0	bb+	Moderate	Adequate	Moderate	Weak/Adequate	0	b	0	B	Negative
Other
Burford Capital Ltd.	bb+	0	bb+	Moderate	Very Strong	Weak	Adequate/Moderate	0	bb-	0	BB-	Stable
Hannon Armstrong Sustainable Infrastructure	bb+	0	bb+	Moderate	Strong	Adequate	Adequate/Adequate	0	bb+	0	BB+	Stable
Massachusetts Development Finance Agency	bb+	1	bbb-	Strong	Very strong	Adequate	Strong/Strong	0	a	1	A+	Stable
National Rural Utilities Cooperative Finance	bb+	1	bbb-	Very strong	Adequate	Strong	Adequate/Adequate	1	a	0	A	Stable
Note: As of Jan. 15, 2021. SACP--Stand-alone credit profile. GRE--Government-related entity. ICR--Issuer credit rating.

Table 3

Business Development Companies
Company	Anchor	Entity-specific adjustment	Final anchor	Business position	Capital, leverage, and earnings	Risk position	Funding and liquidity	Comparable ratings adjustment	ICR	Outlook
ARES Capital Corp.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
FS Energy and Power Fund	bb+	1	bbb-	Weak	Very Strong	Very Weak	Moderate/Moderate	0	B	Stable
Golub Capital BDC Inc.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Negative
Main Street Capital Corp.	bb+	1	bbb-	Adequate	Very Strong	Moderate	Adequate/Adequate	-1	BBB-	Stable
Owl Rock Capital Corp.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
Owl Rock Capital Corp. II	bb+	1	bbb-	Adequate	Very Strong	Moderate	Moderate/Adequate	0	BBB-	Stable
Prospect Capital Corp.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Negative
Sixth Street Specialty Lending Inc.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
Note: As of Jan. 15, 2021. ICR--Issuer credit rating.

Primary Credit Analysts:	Stephen F Lynch, CFA, New York + 1 (212) 438 1494; stephen.lynch@spglobal.com
	Matthew T Carroll, CFA, New York + 1 (212) 438 3112; matthew.carroll@spglobal.com
Secondary Contacts:	Brendan Browne, CFA, New York + 1 (212) 438 7399; brendan.browne@spglobal.com
	Adam Grossbard, CFA, New York + 1 (212) 438 8283; adam.grossbard@spglobal.com
	Diogenes Mejia, New York + 1 (212) 438 0145; diogenes.mejia@spglobal.com
	Gaurav A Parikh, CFA, New York + 1 (212) 438 1131; gaurav.parikh@spglobal.com