The negative outlook on Cobra reflects our expectation that, over the next 12 months, the company could sustain leverage above 6.5x. Notwithstanding the elevated leverage, we expect the company to build equity through retained earnings while reporting manageable net charge-offs, despite rising economic headwinds. We could lower the ratings over the next 12 months if we expect leverage to remain above 6.5x or if significant loan losses or lower yields lead to decreased profitability, resulting in losses. We could also lower the ratings if the company makes further distributions to its private equity owner. We could revise the outlook to stable over the next 12 months if we expect Cobra to operate with leverage below 6.5x on a sustained basis
