The Company has a capital lease transaction secured by certain fixed assets and capitalized software. The capital lease matures on June 13, 2022 and bears interest at a spread over one-month LIBOR.

The Company, through the Issuer Trust described in Note 4—Related Party Transactions—Investing Activities, issued term notes (the “Term Notes”) to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the “Securities Act”). The Term Notes rank pari passu with each other and with the VFN issued by the Issuer Trust to PLS and are secured by certain participation certificates relating to Ginnie Mae MSRs and ESS that are financed pursuant to the GNMA MSR Facility.

(1)	Spread over one-month LIBOR.

(2)	The Term Notes’ indentures provide the Company with the option to extend the maturity of the Term Notes by two years after the stated maturity.

MSR Note Payable

On February 1, 2018, the Company issued a note payable that is secured by Freddie Mac MSRs. Interest is charged at a rate based on LIBOR plus the applicable contract margin. The facility expires on March 31, 2023. The maximum amount that the Company may borrow under the note payable is $600 million, less any amount outstanding under the agreement to repurchase pursuant to which the Company finances the VFN. The Company did not borrow under this note payable during the periods presented.

Notes payable secured by mortgage servicing assets are summarized below:


	Quarter ended March 31,
	2021			2020

	(dollars in thousands)
Average balance	$	1,300,000		$	1,300,000
Weighted average interest rate (1)		2.88	%		4.43	%
Total interest expense	$	9,888		$	14,846

(1)	Excludes the effect of amortization of debt issuance costs totaling $544,000 and $445,000 for the quarters ended March 31, 2021 and 2020, respectively.


	March 31,			December 31,
	2021			2020

	(dollars in thousands)
Carrying value:
Unpaid principal balance	$	1,300,000		$	1,300,000
Unamortized debt issuance costs		(3,715)			(4,160)
	$	1,296,285		$	1,295,840
Weighted average interest rate		2.87	%		2.93	%
Assets pledged to secure notes payable (1):
Servicing advances	$	373,110		$	413,484
Mortgage servicing rights	$	3,047,056		$	2,421,326
Deposits	$	102,270		$	153,054

(1)

Beneficial interests in the Ginnie Mae MSRs, servicing advances and deposits are pledged to the Issuer Trust and together serve as the collateral backing the VFN, GMSR Servicing Advance Notes and the Term Notes. The VFN financing and the GMSR Servicing Advance Notes are included in Assets sold under agreements to repurchase and the Term Notes are included in Notes payable secured by mortgage servicing assets on the Company's consolidated balance sheets.

Unsecured Senior Notes

The Company issued unsecured senior notes (the “Unsecured Notes”) to qualified institutional buyers under Rule 144A of the Securities Act. The Unsecured Notes are senior unsecured obligations of the Company and will rank senior in right of payment to any future subordinated indebtedness of the Company, equally in right of payment with all existing and future senior indebtedness of the Company and effectively subordinated to any future secured indebtedness of the Company to the extent of the fair value of collateral securing such indebtedness.

The Unsecured Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of PFSI’s existing and future wholly-owned domestic subsidiaries (other than certain excluded subsidiaries). The guarantees are senior unsecured obligations of the guarantors and will rank senior in right of payment to any future subordinated indebtedness of the guarantors, equally in right of payment with all existing and future senior indebtedness of the guarantors and effectively subordinated to any future secured indebtedness of the guarantors to the extent of the fair value of collateral securing such indebtedness. The Unsecured Notes and the guarantees are structurally subordinated to the indebtedness and liabilities of the Company’s subsidiaries that do not guarantee the Unsecured Notes.

Following is a summary of the Unsecured Notes issued:


Issuance date	Principal balance		Coupon rate	Maturity date
	(in thousands)		(Annual)
September 29, 2020	$	500,000	5.38%	October 15, 2025
October 19, 2020		150,000	5.38%	October 15, 2025
February 11, 2021		650,000	4.25%	February 15, 2029
	$	1,300,000

Before October 15, 2022 or February 15, 2024 for the Unsecured Note issued during 2020 and 2021, respectively, the Company may, at its option redeem earlier in accordance with the terms of the Unsecured Notes:

●

some or all of the Unsecured Notes at a price equal to 100% of the principal amount of the Unsecured Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, plus a make-whole premium; and

●

up to 40% of the aggregate principal amount of the Unsecured Notes with an amount equal to or less than the net proceeds from certain equity offerings at a redemption price of 105.375% and 104.25% for the Unsecured Notes issued during 2020, and 2021, respectively, plus accrued and unpaid interest to, but excluding, the redemption date.

●

If a “change of control” (as defined in the indenture under which the Unsecured Notes were issued) occurs, the holders of the Unsecured Notes may require the Company to purchase for cash all or a portion of their Unsecured Notes at a purchase price equal to 101% of the principal amount of the Unsecured Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.


	Quarter ended
	March 31, 2021
	(dollars in thousands)
Average balance	$	1,003,889
Weighted average coupon rate (1)		4.91	%
Total interest expense	$	12,670

(1)	Excludes the effect of amortization of debt issuance costs totaling $347,000.


	March 31,			December 31,
	2021			2020

	(dollars in thousands)
Carrying value:
Unpaid principal balance	$	1,300,000		$	650,000
Unamortized debt issuance costs, net of issuance premiums		(11,802)			(4,180)
	$	1,288,198		$	645,820
Weighted average coupon rate		4.81	%		5.38	%

Maturities of Long-Term Debt

Maturities of long-term debt obligations (based on final maturity dates) are as follows:


	Twelve months ended March 31,
	2022		2023		2024		2025		2026		Thereafter		Total

	(in thousands)
Obligations under capital lease	$	8,374	$	2,094	$	—	$	—	$	—	$	—	$	10,468
Notes payable secured by mortgage servicing assets		—		650,000		650,000		—		—		—		1,300,000
Unsecured Notes		—		—		—		—		650,000		650,000		1,300,000
Total	$	8,374	$	652,094	$	650,000	$	—	$	650,000	$	650,000	$	2,610,468