PennyMac is back in the market with its fourth securitization of mortgage loan revenue, setting out to raise $355.5 million in mortgage-backed securities (MBS) through the PMT Loan Trust 2025-INV4.
The transaction includes 993 fixed-rate agency eligible mortgages collateralized by investment properties, which accounts for 71.9% of the pool, according to Kroll Bond Rating Agency.
PMT Loan Trust will issue notes that pay coupons ranging from 5.5% on the tranche rated Aaa and AAA from Moody's and KBRA, respectively, to 6.8% on the notes rated B3 and B+ respectively. Also, a large swath of the exchangeable class A notes—many of which are interest only—have coupons of 0.5%, according to Asset Securitization Report's deal database.
According to KBRA's capital structure description, the four super senior notes benefit from credit enhancement representing 15.0% of the balances on the A1 through A27 tranches. Following the super senior notes, there is a layer of senior support tranches, A28 through A33, that benefit from credit support equaling 6.85% of the note balances.
Subordinate notes, which will be repaid sequentially, benefit from credit enhancements ranging from 5.00% on the B1 notes through 0.65% the B5 notes, according to KBRA.
The notes have a maturity date of March 2056.
The agency-eligible mortgages in the underlying pool are of prime quality. They have an average balance of $358,024, a weighted average (WA) original FICO score of 776, an original cumulative loan-to-value (LTV) ratio of 73.6%, and a WA debt-to-income (DTI) ratio of 36.3%, KBRA said. Borrowers have a median income of $224,172, and WA liquid reserves of $482,511.
In terms of the mortgages' designations, 66.6% of the pool are Ability-to-Repay exempt, while just under a third, 27.7%, fit the safe harbor designations, the rating agency said.
KBRA assigned AAA to the A1 through A127 notes; AA+ to the A28 through AX1 notes; and AAA to the exchangeable AX2 through AX27; AA+ to the AX30 through AX33; and AA-, A-, BBB, BB+, B+ to the B1 through B5 notes, respectively.
Moody's also assigned ratings to the notes, according to the ASR database. It assigned Aaa to the A1 through AX27 notes; Aa1 to the Ax30 through AX33; Aa3 to the B1 notes; and A3, Baa3, Ba3, and B3 to the B2, B3, B4 and B5 notes.
There is also an A1A Loans tranche that gets Aaa and AAA ratings from Moody's and KBRA, respectfully.
