...We forecast Mercury Borrower Inc.'s (Ascensus LLC) total available liquidity sources will decline and reach a trough of about $100 million in 2023, which is down from over $150 million as of June 30, 2022. The company had $138 million available under its revolving credit facility and considered only about $12 million of its $170 million of balance sheet cash as fully available as of June 30, 2022. Rising interest rates threaten to weaken Ascensus' cash flow and interest coverage credit metrics. The company's $2.4 billion of floating-rate debt remains unhedged through interest rate swaps; however, it earns interest income on about $1.5 billion of client cash in transit (about 60% of the face value of its floating-rate debt) which acts as a natural hedge that could somewhat offset the effect of rising interest rates. Furthermore, high labor costs and the upfront acquisition integration costs associated with the company's recently closed acquisition of Newport Group will pressure its reported...
