Rithm Capital Corp. RITM reached a milestone by issuing an $878-million mortgage servicing rights (MSR)-backed securitized note, marking the largest MSR-backed debt issuance in history. This is only the second-ever non-recourse MSR securitization, meaning the debt is backed solely by MSR assets rather than Rithm’s broader financials. The three-year fixed financing provides stability, ensuring predictable cash flow over the lifespan of the assets.

This transaction follows Rithm’s first non-recourse MSR securitization in November 2024, reinforcing its pioneering role in structured MSR financing. Since 2015, the company has closed 17 MSR-backed deals worth more than $7.7 billion, solidifying its expertise in the space.

MSRs gain value when interest rates are high, as fewer homeowners refinance, ensuring a steady stream of servicing fees. This deal enhances Rithm’s liquidity without increasing traditional corporate debt, allowing it to expand operations while minimizing financial risk.

Investors are responding positively, seeing this as a sign of confidence in Rithm’s mortgage servicing capabilities. By successfully executing this transaction, the company demonstrates its ability to tap into capital markets while maintaining financial flexibility. It exited the fourth quarter of 2024 with cash and cash equivalents of $1.5 billion, which increased from the 2023-end level of $1.29 billion.

Ultimately, this transaction is a win-win — providing fresh capital, reducing risk and reinforcing Rithm’s leadership in the MSR market. As investor interest grows, this could pave the way for more deals, further strengthening the New York-based company’s position in structured mortgage financing.

RITM’s Price Performance

RITM shares have gained 5.4% in the past year against the industry’s decline of 2.2%.

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RITM’s Zacks Rank & Other Key Picks

Rithm Capital currently has a Zacks Rank #2 (Buy).

Investors interested in the broader Finance space may look at some other top-ranked players like Jackson Financial Inc. JXN, Globe Life Inc. GL and NewtekOne, Inc. NEWT, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $20.86 per share, which indicates 11% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues is pegged at $7.18 billion.

The Zacks Consensus Estimate for Globe Life’s current-year earnings indicates 12.1% year-over-year growth. During the past two months, GL has witnessed six upward estimate revisions against none in the opposite direction. It beat earnings estimates thrice in the past four quarters and missed once, with an average surprise of 4.4%.

The Zacks Consensus Estimate for NewtekOne’s current-year earnings suggests a 12.2% year-over-year increase. During the past month, NEWT has witnessed three upward estimate revisions against none in the opposite direction. The consensus mark for current-year revenues is pegged at $293.85 million, indicating a 14.1% increase from a year ago.

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This article originally published on Zacks Investment Research (zacks.com).

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