Genworth Financial Inc.

The CreditWatch positive placement reflects GMICO's governance benefits from the partial IPO listing. We could raise our ratings on GMICO by up to two notches within three months from the date of initial launch of IPO in May if: The IPO is successfully completed, resulting in about 20% minority shareholding, Governance aspects are assessed to provide meaningful mitigation of Genworth's influence, GMICO's capitalization is sufficiently redundant at the 'BBB' stress level. We could affirm the ratings and revise the outlook to negative in case the IPO is not completed within the aforementioned timeframe. Furthermore, we could lower our ratings on GMICO over the next 12 months if: Genworth's consolidated capitalization weakens below the 'BBB' confidence level on a sustained basis;

...The company is facing significant liquidity constraints. Close to $900 million of obligations are due between the September 2021 debt maturity and AXA S.A. promissory notes to be paid by 2022. So far, Genworth Financial Inc. (NYSE: GNW; Genworth)has relied on asset sales (Canadian and Australian mortgage insurance business), a portion of the 2020 debt issuance of $750 million through its U.S. mortgage insurance business, and inter-company cash tax payments from its subsidiaries to manage its obligations. The company has sufficient funds to address its upcoming September debt maturity. Genworth issued a notice for early redemption of 2021 securities on June 21, 2021. However, Genworth's ability to handle the final AXA payment (approximately $343 million) and manage its debt load would require additional resources. Partial initial public offering of Genworth Mortgage Insurance Corp., its U.S. mortgage insurance business, would provide relief. The proceeds from the partial initial public offering...

Full Report