S&P Global Ratings expects most rated U.S. finance companies in 2022 to perform well, generating relatively good earnings and maintaining good access to funding. Continued growth in the economy will support their performance despite potential risks related to the pandemic, monetary tightening, and froth in many asset prices.

S&P Global economists expect the U.S. economy to grow 3.9% in 2022, following estimated growth of 5.5% in 2021, with a relatively low 10%-15% risk of recession. They also expect the Federal Reserve to finish tapering by March, to raise rates three times this year starting in May, and to announce a plan for quantitative tightening in early 2023.

GDP growth should boost finance companies' asset quality, leading to further lending opportunities and keeping borrower delinquencies manageable. For instance, we expect money exchange and payment companies' good volumes to continue, consumer lenders to benefit from higher borrowing demand, and private debt lenders to deploy increasing levels of capital. That said, there is some risk that monetary tightening could result in volatility, widening credit spreads, reduced asset prices, or a slowdown in the economy, any of which could affect finance companies.

Rising rates also carry implications and risks for finance companies. In our base case, we expect finance companies generally to continue to enjoy good access to funding from banks and debt investors, even at a somewhat higher cost. This assumes that monetary tightening does not cause a significant slowdown or increased concerns about speculative-grade borrowers.

Asset-sensitive finance companies will benefit from higher rates, but some may be negatively affected. For instance, for residential mortgage companies, high rates will very likely lead to lower origination volumes and weaker financial results, even though the value of their mortgage servicing rights (MSRs) should climb. Rising rates may also push cap rates higher and lower valuations on commercial real estate (CRE), which could be an additional challenge for CRE lenders and owners.

We do not anticipate major changes in regulation for finance companies. The Biden administration will likely continue to apply a more conservative and aggressive regulatory approach than the previous administration, which creates some risk for finance companies in certain areas. At the same time, that approach also applies to bank regulation, which indirectly creates more room for finance companies to compete.

Residential Mortgage: Higher Rates Would Hit Origination Volumes And Profitability

Key credit drivers

The 30-year mortgage rate remained low in 2021.   Low interest rates over the last year helped maintain the staggering amount of originations, though profitability in 2021 was weaker than 2020 due to lower GOS margins from increased market competition. The 30-year rate hovered around 3% in 2021 and was 3.45% at the time of this publication. The Mortgage Bankers Assn. (MBA) expects originations to decline to a still very robust $2.6 trillion in 2022 (from about $3.9 trillion in 2021), with interest rates rising to 4% by fourth-quarter 2022.

Volatility is the constant in residential mortgage lending.   Volatility is inherent in this business, especially with mortgage volumes, GOS margins, and, ultimately, EBITDA. An issuer's ability to manage this volatility has a lot to do with the strength of its platform, as well as how effective management is at responding to changing 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 is less of a concern.   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 increases foreclosures, this would also mean higher servicing costs. Forbearance overall was only 1.67% of total loans as of Nov. 30, 2021, compared with 5.48% as of Dec. 6, 2020, with Fannie Mae and Freddie Mac loans at 0.76%, Ginnie Mae loans at 2.10%, and private-label securities and other loans at 3.94%, according to data tracked by MBA.

What to look for over the next year

GOS margins and profitability reflect competition.   Profits are quite literally "earned" in the highly competitive mortgage market. We monitor GOS 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. Despite 2021 origination volumes being close to 2020 levels, nonbank mortgage companies have already started to experience lower GOS margins from increased competitive pressure. Lower originations from an increase in rates would only compress GOS margins further in 2022.

Leverage will normalize from current lows.   We expect lower originations and GOS margins to increase our debt-to-EBITDA leverage metric for issuers in 2022. However, these will be from record-low leverage for many issuers in 2021 and 2020. Leverage in 2022 will also be affected by debt raises that occurred in 2021 and 2020. Despite these changes, higher MSR valuations could lead to improving debt-to-tangible equity metrics.

Auto Lending: Strong Asset Quality Trends Could Start To Normalize

Key credit drivers

Credit quality could normalize.   Delinquencies and charge-offs were kept low by government stimulus, boosted customer savings, and strong recoveries from high used-car prices in 2021. While macroeconomic trends seem favorable, we may see normalization of asset quality in 2022, particularly if consumer credit weakens and used-car prices decline materially.

Higher rates may raise the cost of funding.   Access to funding to support new originations is crucial to auto finance company operations and can be more difficult during economic downturns. This happened during March through May 2020, when instabilities in the auto ABS market inhibited some rated auto lenders from accessing it until June. An increase in benchmark interest rates could also elevate the cost of funding, hurting profitability.

Key assumptions

Credit will deteriorate modestly.   We expect delinquencies and charge-offs to increase closer to pre-pandemic levels. While the current strength in used-car prices and auction values may be tough to sustain, we expect unemployment to remain low. The unemployment rate was 3.9% in December 2021, and S&P Global economists forecast that it will remain around 4% in 2022 and 3.7% in 2023.

Macro conditions will remain favorable.  We expect U.S. real GDP to grow 3.9% in 2022 after an expected 5.5% growth in 2021, with a relatively low 10%-15% risk of recession.

We expect three rate hikes in 2022.   S&P Global economists expect the first rate hike at the May Federal Open Market Committee (FOMC) meeting.

What to look for over the next year

Impact of higher rates.   The expected increase in benchmark rates could elevate the cost of funding for auto lenders, which would impact the cost of funds in the ABS and unsecured markets and lower profitability.

Used-car prices.   Prices for used cars have increased since third-quarter 2020 due to supply shortages, ending 2021 at record levels. The high prices have aided net charge-offs via improving recoveries. But if used-car prices decline in 2022, and credit deteriorates at the same time, loss given default could increase for lenders. Lower car prices would also have a significant impact on residual values on leased vehicles.

Fleet Management And Leasing: Order Backlogs Should Begin To Clear

Key credit drivers

Resilient leverage in the face of COVID-19 stress.  Fleet management was one of the few industries for which leverage declined despite the stress over the past two years. 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, although it will be pressured as rates rise.

Favorable access to cheap nonrecourse ABS market.  Issuance activity in the commercial fleet leasing ABS market was favorable in 2021, a trend we expect to continue. The industry continued to report negligible credit losses on leased vehicles because of high used-car prices, strong underwriting, and open-end leases, which shift residual value risk to customers.

What to look for over the next year

Demand should be met, and originations should return to 2019 levels in late 2022.  We believe that the auto OEM supply constraints are temporary headwinds to originations and that a backlog of orders is growing. We view commercial fleets as critical equipment for clients, and we do not think cumulative demand for new vehicles will be affected by delays in deliveries. In 2022, we are watching to see how new vehicle demand responds following a year when customers were forced to hold off on new purchases and extend the life of existing fleet vehicles.

Earnings should grow, but EBIT could face modest pressure as interest rates rise.   Over the past three years, EBIT coverage has improved because of strong earnings and lower interest costs. Although we expect earnings will continue to steadily improve, we believe interest costs will rise in line with our economists' forecasts. Most of the interest expense is passed through to vehicle leasing clients. Fleet leasing companies also capture earnings from clients' vehicle lease payments. As such, we believe EBIT coverage has been stronger than usual due to low interest rates lowering these pass-through costs and will therefore have a larger drag on coverage ratios as rates rise.

Money Exchange And Payment Processing: The Winners Are Diversifying Products

Key credit drivers

Working capital expands as transaction volumes recover, pressuring net debt.  In 2020, working capital declined as business activity slowed, which led to higher cash balances and lower net debt. In 2021, this reversed as volumes recovered and cash was redeployed into working capital. We expect the trend will continue in line with our economists' GDP forecasts.

Product and geographic diversity show varying exposure to COVID-19 risks.   In 2021, the money exchange and payment processing companies we rate saw earnings recover to 2019 levels following a challenging 2020. We continue to view the sector as having a high beta to GDP, which can quickly change with new COVID-19 variants and lockdowns. We favorably view companies with greater product and geographic diversity because this helps mitigate stress on revenue streams.

What to look for over the next year

Travel segments still exposed to COVID-19 but benefit from seasonality trends.   COVID-19 cases are higher during winter months when people tend to congregate inside to avoid cold weather. Travel spending, on the other hand, is more common in summer months. This should help mitigate lower travel spending as long as governments allow travel and workers and vacationers feel comfortable traveling. Euronet's electronic funds transfer (EFT) is the most exposed to travel trends, primarily in Europe, where the company operates automatic teller machines (ATMs). Both Fleetcor's lodging (10% of 2020 revenue) and Wex's travel and corporate services (20%) are also exposed to online bookings for lodging to varying degrees in the U.S.

Global remittance volumes rise, which bodes well for money transfers.  Throughout 2021, we saw a sharp rebound in global remittances, with total flows projected to reach $751 billion, growing 6.5% year over year, or about 4.0% from 2019. This strong growth in global remittance flows helped Euronet, MoneyGram, and Western Union achieve top-line growth in their money transfer, global funds transfer, and consumer-to-consumer segments, respectively, in 2021. Looking ahead, we are forecasting continued growth in consumer-to-consumer money transfers both in terms of volume and total value, as global remittances are projected to grow yet another 3.1% in 2022 according to the World Bank.

Not everyone is frowning about higher prices at the pump.   Higher fuel prices generally translate in higher earnings for Fleetcor's fuel card segment (45% of 2020 revenue) and Wex's fleet solutions segment (60%). For these segments, the companies earn a percentage fee on total transaction purchase amounts from fuel merchants. S&P Global economists expect West Texas Intermediate crude oil to rise to $67.5/barrel in 2022 from $39.3/barrel in 2021. Volume, or gallons purchased, is the other component of the revenue equation and will be sensitive to GDP assumptions and customer industries. In 2020, Fleetcor estimated that the absolute price of fuel directly influenced 11% of its consolidated revenue, while Wex estimated that only 20% of revenue in the fleet solutions segment was related to fuel prices. Both companies also earn additional revenue from the fuel price spread between the price charged to customers and the price paid to the fuel merchant. Fleetcor estimated that 8% of 2020 consolidated revenue was tied to the fuel price spread.

Bitcoin is more opportunity than threat for now.   Square, which recently changed its name to Block in a nod to the blockchain that underpins cryptocurrency, earns a fee when its CashApp users buy or sell the crypto asset. The company is looking to further integrate the cryptocurrency into its growing ecosystem of financial products. The company also announced a new platform named TBD, which CEO Jack Dorsey described as being focused on building an open developer platform with the sole goal of making it easy to create noncustodial, permissionless, and decentralized financial services.

One of Bitcoin's greatest value propositions is that it can be transferred to and from digital wallets globally with a nominal fee referred to as "gas". Currently the gas fee runs around $4, which, on the face of it, looks like a competitive threat to global money transfer providers Western Union, Moneygram, and Euronet's RIA, where prices are higher and fees are based on more factors. However, we do not view this as a near-term threat because Bitcoin's $800 market capitalization (at $42,500 price) is nominal when compared to the global currency market. Moreover, Bitcoin can only process seven transactions per second, which will limit its scalability.

Consumer Lending: Originations Will Get A Bump As Stimulus Expires And Inflation Rises

Key credit drivers

Consumers' state of affairs.   We expect that a rise in consumer spending, declining unemployment claims, and modest wage growth, coupled with rapid inflation, will likely lead to reduced purchasing power for subprime consumers and increased loan demand.

Provision for losses.   We expect consumer finance companies will maintain adequate provisions to absorb potential losses as origination volumes rise and delinquencies gradually return to the historical norm.

Ample liquidity.   Enhanced government stimulus during the pandemic led to higher repayments and lower origination volumes. In addition, we saw companies take advantage of low interest rates and credit spreads to raise secured and unsecured debt. For 2022, we expect consumer finance companies to have ample liquidity in the form of cash on balance sheet, access to secured and unsecured markets, and no significant refinancing risk.

Key assumptions

Rise in origination volumes.   We expect origination volumes to rise as forbearance programs expire, government stimulus fades, and inflation exceeds negative real wage gains and squeezes purchasing power.

Favorable economic trends.   S&P Global economists expect real GDP to grow 3.9% in 2022 compared with expected growth of 5.5% in 2021, with a relatively low 10%-15% risk of recession. Unemployment is currently 3.9%, lower than 8.1% in 2020 but still above the 3.7% level seen at the end of 2019. We view GDP and unemployment as indicators for consumer wages and demand for lending products.

What to look for over the next year

Trends in charge-offs and delinquencies.   We expect charge-offs and delinquencies to rise from historically low levels and gradually revert to their historical average, as government stimulus fades and consumer repayment behavior changes due to inflation.

Array of financing products.   We expect consumer finance companies to strategically diversify their product mix and grow their customer base by offering additional financing options in the form of credit cards, retail point of sale, and installment loans. A rise in originations as well as a shift into new products could lead to execution risk and a riskier portfolio mix. For 2022, TransUnion expects total origination volume of personal loans to be $20 million compared with $17.9 million in 2021 and 18.8 million in 2019.

Regulatory pendulum.   While federal risk has waned over the past year, state governments continue to make regulatory changes that affect the lending strategies of consumer financing companies, specifically payday lenders that charge triple-digit annual percentage rates (APRs). In 2021, Illinois capped personal loans' all-in interest at a 36% APR. Effective Jan. 1, 2022, Hawaii capped personal loans' all-in interest at a 36% APR, and it requires payday companies to offer installment loans. Further regulatory changes to rate caps pose significant risks to these companies.

Increased competition from acquisitions.   In 2021, banks grew their exposure to nonprime lending through acquisitions. For instance, Goldman Sachs acquired Greensky and Duo Bank of Canada acquired Fairstone Financial. We expect that greater competition could lead to aggressive credit underwriting, raise credit provisions, and affect net margins for some.

BDCs And Leveraged Lending: Low Corporate Default Rates Should Support Asset Quality

Key credit drivers

The strength of the economy.   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. Credit losses generally spike during and immediately following recessions.

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 are secular trends that have intensified competition, in our view. We believe lenders temporarily became more defensive during the pandemic, but competition may now be pressuring pricing.

Financing conditions.   Financing conditions influence the ability of wholesale-funded, nonbank financial institutions to obtain funding for growth, refinance maturing borrowings and credit facilities, and 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 help borrowers service their debt, making default less likely. When lenders incorporate floors on floating-rate loans, declining rates can enhance their net interest margins. Conversely, when rates rise, net interest margins may compress until the rates are above the floor levels.

Key assumptions

U.S. GDP will continue to rise.  We currently forecast real GDP to grow 3.9% in 2022 after an expected 5.5% growth rate for 2021, with a relatively low 10%-15% risk of recession. We forecast that the U.S. trailing-12-month speculative-grade corporate default rate will slightly increase to 2.5% by September 2022 from 2.4% as of September 2021.

We expect three rate hikes in 2022.   We expect the first rate hike at the May FOMC meeting.

What to look for over the next year

Asset quality.   Consistent with the low forecasted corporate credit default rate, we expect realized credit losses to be modest for most BDCs and other commercial finance companies. In this environment, loans on nonaccrual status may decline, as well as payment-in-kind (PIK) in lieu of cash. However, if interest rates rise, carrying values of loans may decline somewhat for lenders that mark-to-market, such as BDCs.

Earnings.   We expect earnings to be largely stable in 2022, driven by business volumes, although spread compression may be a headwind, in light of competition, particularly for upper-middle-market loans.

Leverage.   We expect most rated issuers to continue to operate within their targeted leverage ranges and consistent with expectations for the current ratings.

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: Fewer Pandemic Restrictions Could Swing The Pendulum In A Positive Direction

Key credit drivers

The strength of the economy.   CRE is cyclical and linked to the health of the economy, as well as secular trends affecting certain property types, such as retail and office.

Financing conditions.   CRE finance companies typically rely on wholesale financing, including bank facilities, securitizations, and unsecured bonds.

Liquidity.   CRE lenders need to be able to manage liquidity to meet undrawn commitments to their borrowers, as well as potential margin calls on repurchase facility borrowings.

Key assumptions

U.S. GDP continues to rise in 2022.   We currently forecast real GDP to grow 3.9% in 2022 after an expected 5.5% growth rate for 2021, with a relatively low 10%-15% risk of recession. We forecast that the U.S. trailing-12-month speculative-grade corporate default rate will slightly increase to 2.5% by September 2022 compared with 2.4% as of September 2021.

We expect three rate hikes in 2022.   We expect the first rate hike at the May FOMC meeting.

Asset quality.   With the widespread availability of vaccines, we think the likelihood of substantial further deterioration in CRE loan portfolios has lessened.

What to look for over the next year

Quality of loan portfolios.   We will continue to monitor for property-specific issues, especially for malls, office properties, and hotels. Most office properties have multiyear leases, so properties that have multiple tenants with varying lease end dates will give property owners time to adjust. That said, we remain cautious about a secular decline in office space needs as companies adopt hybrid work models and delay their return to office because of the recent resurgence in COVID-19 cases.

Impact of rising interest rates.   Property values have benefited from low interest rates and ample supply of capital in both the debt and equity capital markets. However, an uptick in interest rates or disruption in the capital markets could blunt these trends. We do not anticipate a significant impact on earnings because most loans have floating rates.

Funding profiles.   The funding mix varies among CRE finance companies. We would view reduced reliance on repurchase facilities and greater unsecured funding as credit positives.

CRE Services: Pockets Of Strength Could Mitigate Uncertainty From Office Leasing

Key credit drivers

Revenue and EBITDA margin.   For the typical CRE company we rate, we expect about 30%-40% of fee revenues to be from recurring sources, such as property and facilities management, 30%-35% from leasing, and 20%-25% from capital markets. As business activity recovers, CRE companies could experience modest compression in their EBITDA margins due to inflationary pressure on wages and the reversal of temporary cost-reduction strategies implemented during the pandemic.

Leverage management.  The stronger-than-expected growth in transactional volume in the second half of 2021 led to double-digit EBITDA growth for most of the companies we rate. Despite EBITDA growth, we expect leverage to largely remain within our thresholds as companies prudently accessed the unsecured debt markets to lock in low interest rates. Several of the companies we rate have targets to keep their net debt to EBITDA below 2.0x, a level we view favorably.

Capital allocation.  We expect financially well-positioned companies to strategically deploy capital through a contribution to a special-purpose acquisition company (SPAC), acquisitions, or joint venture to gain exposure to favorable business segments.

Key assumptions

Fee revenue growth to remain robust.   Despite uncertainty in office leasing as companies transition to hybrid work models, we expect CRE services companies' fee revenue to grow, driven by capital markets and property and facilities management segments. We expect continued strength in industrial warehouse, life science, and technology sectors.

Macro conditions to remain favorable in 2022.  We expect the U.S. real GDP to grow 3.9% in 2022 after an expected 5.5% growth in 2021, with a relatively low 10%-15% risk of recession. We expect the Fed to raise interest rates three times in 2022, with the first rate hike expected in May 2022.

Short-term stable multifamily origination volume and favorable maturity stack.   According to MBA, there is about $119 billion in upcoming multifamily maturities through 2023, rising to $684 billion by 2030. MBA forecasts multifamily origination volume to gradually rise to $421 billion in 2022 from $409 billion in 2021.

What to look for over the next year

Fee revenue mix.  We expect CRE services companies' fee revenue mix to remain largely unchanged in 2022. We expect a decline in transactional volume from office leasing to be offset by growth in warehouse leasing, industrial leasing, and capital markets. Companies will likely continue to grow recurring fee revenue from property and facilities management.

Earnings.  We expect earnings to remain largely steady in 2022, driven by core business services and earnings from equity investments, the latter of which we view as less predictable. We expect most of the rated issuers to operate within leverage ranges consistent with current outlooks.

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 qualified multifamily mortgages backed by Fannie Mae and Freddie Mac indefinitely. We expect that servicers will maintain adequate funding facilities for these requests and that liquidity will remain steady.

Appendix: Rating Component Scores

Table 1

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

Table 2

NBFI Finance Companies
Company	Preliminary anchor	Entity-specific adjustment	Anchor	Business position	Capital and earnings	Risk position	Funding and liquidity	Comparable ratings adjustment	SACP	Group/GRE support	ICR	Outlook
Auto lending
Cobra AcquisitionCo LLC	bb+	0	bb+	Moderate	Moderate	Constrained	Moderate/Adequate	1	b	0	B	Stable
Credit Acceptance Corp.	bb+	0	bb+	Moderate	Strong	Moderate	Adequate/Adequate	0	bb	0	BB	Stable
Commercial lending
Jefferies Finance LLC	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Moderate	0	b+	1	BB-	Stable
KKR Financial Holdings LLC	bb+	0	bb+	Moderate	Very strong	Constrained	Adequate/Adequate	0	bb-	4	BBB	Stable
MidCap Financial Issuer Trust	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Adequate	0	bb-	0	BB-	Stable
National Rural Utilities Cooperative Finance Corp.	bb+	1	bbb-	Very strong	Adequate	Adequate	Adequate/Adequate	1	a-	0	A-	Stable
Oxford Finance LLC	bb+	0	bb+	Moderate	Adequate	Moderate	Moderate/Adequate	1	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+	Stable
Blackstone Mortgage Trust Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Moderate/Adequate	0	b+	0	B+	Positive
Claros Mortgage Trust Inc.	bb+	0	bb+	Moderate	Strong	Moderate	Moderate/Adequate	(1)	b+	0	B+	Stable
iStar Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Adequate	1	bb	0	BB	Stable
KKR Real Estate Finance Trust Inc.	bb+	0	bb+	Moderate	Adequate	Moderate	Moderate/Adequate	1	bb-	0	BB-	Stable
Ladder Capital Finance Holdings LLLP	bb+	0	bb+	Moderate	Adequate	Adequate	Moderate/Adequate	0	bb-	0	BB-	Stable
Starwood Property Trust Inc.	bb+	0	bb+	Adequate	Adequate	Moderate	Moderate/Adequate	0	bb-	0	BB-	Stable
Consumer finance
goeasy Ltd.	bbb-	0	bbb-	Moderate	Strong	Constrained	Moderate/Adequate	0	bb-	0	BB-	Stable
Navient Corp.	bb+	0	bb+	Moderate	Adequate	Moderate	Adequate/Adequate	0	bb-	0	BB-	Stable
New Residential Investment Corp.	bb+	0	bb+	Moderate	Adequate	Moderate	Weak/Adequate	0	b	0	B	Stable
OneMain Holdings Inc.	bb+	0	bb+	Adequate	Moderate	Moderate	Adequate/Adequate	0	bb-	0	BB-	Positive
World Acceptance Corp.	bb+	0	bb+	Moderate	Strong	Constrained	Moderate/Adequate	(1)	b	0	B	Stable
Other
Burford Capital Ltd.	bb+	0	bb+	Moderate	Very Strong	Constrained	Adequate/Moderate	0	bb-	0	BB-	Stable
Hannon Armstrong Sustainable Infrastructure Capital Inc.	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
SACP--Stand-alone credit profile. GRE--Government-related entity. ICR--Issuer credit rating.

Table 3

Business Development Companies
Company	Preliminary anchor	Entity-specific adjustment	Anchor	Business position	Capital 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
Blackstone Private Credit Fund	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
FS Energy and Power Fund	bb+	1	bbb-	Constrained	Very Strong	Constrained	Moderate/Moderate	0	B	Stable
Golub Capital BDC Inc.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
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
Owl Rock Technology Finance Corp.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
Prospect Capital Corp.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
Sixth Street Specialty Lending Inc.	bb+	0	bb+	Adequate	Very Strong	Moderate	Adequate/Adequate	0	BBB-	Stable
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 Contact:	Gaurav A Parikh, CFA, New York + 1 (212) 438 1131; gaurav.parikh@spglobal.com