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BORROWINGS
 9 Months Ended
Sep. 30, 2025
Debt Disclosure [Abstract]  
BORROWINGS BORROWINGS
The following table sets forth the Company’s outstanding borrowings as of the date indicated (in thousands):

September 30, 2025December 31, 2024
Secured borrowing
$131,525 $176,089 
Exchangeable notes$148,148 $146,342 
Long-term debt$487,789 $321,317 

The Company was in compliance with all covenants as of September 30, 2025 and December 31, 2024.

Secured Borrowing

During the three months ended September 30, 2025, the Company has repaid $153.9 million of secured borrowing, following the issuance of Senior Notes. As a result of these transactions, the Company has incurred a loss of $1.1 million during the three months ended September 30, 2025, related to the write-off of deferred issuance costs reported within “Loss from extinguishment of debt” in the unaudited condensed consolidated statements of operations.

Risk Retention Master Repurchase

In the normal course of business, the Company, through consolidated VIEs, enters into repurchase agreements to finance the Company’s risk retention balance in notes and certificates retained from securitization transactions. Under these agreements, the Company pledges financial instruments as collateral. These agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledged by the counterparty are included in Investments in loans and securities in the Company’s unaudited condensed consolidated balance sheet. As of September 30, 2025 and December 31, 2024, the outstanding principal balance under the repurchase agreements was $68.4 million and $144.0 million, respectively, which is recorded within secured borrowing on the
unaudited condensed consolidated balance sheet, with a weighted average interest rate of approximately twelve percent and fifteen percent, respectively. The average remaining contractual maturities of the repurchase agreements were greater than 90 days as of both September 30, 2025 and December 31, 2024.

Receivables Facility

In April 2025, Pagaya Structured Products LLC, a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement (the “LSA Agreement”) with certain lenders. This agreement established a 24-month Capitalized Interest Amounts Facility (the “CIA Facility”) with a maximum principal amount of $24 million to finance eligible capitalized interest amounts related to sponsored securitization transactions. Additionally, in June 2025, Pagaya Structured Products LLC entered into a 30-month Accrued Loan Purchasing Fee Receivables Facility (the “ALPF Facility”) with a maximum principal amount of $65 million, to finance certain eligible receivables from sponsored securitization transactions. Borrowings under the CIA Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 4.00%, while borrowings under the ALPF Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 1.9%. As of September 30, 2025, the combined outstanding principal balance under the CIA Facility and ALPF Facility was $63.2 million, which is recorded within secured borrowing on the unaudited condensed consolidated balance sheet.

In June 2025, Pagaya Receivables LLC, a wholly-owned subsidiary of the Company, repaid the outstanding balance of a 3-year loan facility (the “SVB Receivables Facility”) and terminated the related Loan and Security Agreement, which was originally executed in October 2022. Borrowings under the SVB Receivables Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 0.00% floor) plus a margin of 3.50%. As of December 31, 2024, the outstanding principal balance under the SVB Receivable Facility was $31.9 million, which is recorded within secured borrowing on the unaudited condensed consolidated balance sheet.

Exchangeable Notes

On October 1, 2024, the Company, through a wholly owned subsidiary of the Company, issued $160 million aggregate principal amount of its 6.125% Exchangeable Notes (“Notes”) due 2029. The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers. The Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025. The Notes will mature on October 1, 2029, unless earlier repurchased, redeemed or exchanged.

The Company accounted for the issuance of the Notes as a single liability at par as the conversion feature does not require bifurcation as a derivative under ASC 815 and the Notes were not issued at a substantial premium. Debt issuance costs related to the Notes totaled $6.2 million and consisted of underwriting fees and third-party offering costs, which are amortized to interest expense using the effective interest method over the contractual term. The Company recorded $3.1 million and $9.2 million of interest expense, including $0.6 million and $1.8 million of amortization of debt issuance costs, for the three and nine months ended September 30, 2025. The effective interest rate of the Notes is 8.7%.

Long-Term Debt

Senior Notes

On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, completed the issuance of $500 million aggregate principal amount of Senior Unsecured Notes (“Senior Notes”) due 2030. The Senior Notes will accrue interest at a rate of 8.875% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The Senior Notes will mature on August 1, 2030, unless earlier repurchased or redeemed.

The Senior Notes will be redeemable at the option of Pagaya US. At any time prior to August 1, 2027, Pagaya US may redeem the Senior Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the Senior Notes plus a make-whole premium described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On and after August 1, 2027, Pagaya US may redeem the Notes, in whole or in part, at the redemption prices set forth in the Indenture.

The following table details the Company’s Senior Notes as of September 30, 2025 (in thousands):
September 30, 2025
Principal amount$500,000 
Less: Unamortized issuance costs(12,211)
Carrying amount$487,789 

The Company recorded $8.3 million of interest expense, including $0.4 million of amortization of debt issuance costs, for the three months ended September 30, 2025.

Credit Agreement

On February 2, 2024, the Company entered into a certain Credit Agreement (the “Credit Agreement”) which provides for a 5-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million. Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% or (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%.

In November 2024, the Company entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement. Pursuant to the Amendment, the Company incurred incremental term loans in an aggregate principal amount $100 million, bringing the total principal amount of the Term Loan Facility to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million. In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of $58 million. As of September 30, 2025 and December 31, 2024, the Company had letters of credit issued in the amount of $16.6 million and $24.3 million, respectively, and $41.4 million and $25.7 million of remaining capacity available under the Revolving Credit Facility, respectively.

In July 2025, the Company fully paid off the outstanding principal balance under the Credit Agreement using the proceeds from the issuance of Senior Notes, as discussed above. As a result of this transaction and the repayment of outstanding balance under the Credit Agreement, the Company has incurred a loss of $23.9 million during the three months ended September 30, 2025, related to the write-off of deferred issuance costs and an early payment penalty, reported within “Loss from extinguishment of debt” in the unaudited condensed consolidated statements of operations.

2025 Revolving Credit Facility

On October 1, 2025, the Company refinanced the Revolving Credit Facility by way of terminating Credit Agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions. The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million. Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% and (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%, a reduction from the prior revolving credit facility’s rate of SOFR plus 7.50%. A commitment fee accrues on any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions. See Note 15.