Rithm Capital Upgraded to 'B+' by S&P on Successful Diversification

S&P Global Ratings has upgraded Rithm Capital Corp.'s (NYSE: RITM) issuer credit rating to 'B+' from 'B', attributing the move to the company's successful diversification of its income sources beyond its legacy mortgage operations. The rating agency also raised its issue rating on Rithm's senior unsecured notes to 'B' from 'B-' and maintained a stable outlook.

Diversification Drives Upgrade

The upgrade reflects Rithm's evolving business model, which has seen substantial growth in its non-mortgage segments, including asset management, residential transitional lending, and commercial real estate. According to S&P, these expanding platforms accounted for approximately 33% of both shareholder equity and total revenue as of June 30, 2026. This represents a significant increase from the end of 2022, when these businesses contributed just 9% to equity and 13% to revenue.

S&P highlighted the rapid expansion of Rithm's asset management and private credit operations as a key driver. Following the acquisition of Crestline and continued organic inflows, the firm's assets under management surged to approximately $61 billion by mid-2026, up from $34 billion at the end of 2024.

Segment Performance and Headwinds

While diversifying, Rithm's core mortgage finance subsidiary, Newrez, has maintained solid performance despite macroeconomic pressures. Newrez reported $581 million in pretax income for the first half of 2026, a 7% year-over-year increase after excluding mark-to-market adjustments and hedging. This was supported by stable loan originations and strong servicing income.

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This operational strength helps offset ongoing challenges in the company's commercial real estate platform, Elecor, which recorded a $69 million pretax loss in the first half of 2026. S&P noted that the loss was driven by property depreciation and low occupancy rates in San Francisco office buildings. The process of selling down equity in the Elecor platform to third-party investors has also been slower than anticipated.

Financial Profile and Outlook

S&P expects Rithm's leverage, measured as debt-to-adjusted total equity, to remain stable within its target range of 4.5x to 6.5x in the medium term. The ratio stood at 5.7x at the end of the second quarter. The company's rating remains constrained by its reliance on a funding structure heavily weighted toward secured debt ($34.2 billion) compared to unsecured notes ($1.8 billion).

However, the rating agency pointed to mitigating factors, including that about half of the secured debt is non-recourse. Rithm also maintains a strong liquidity position with $1.7 billion in cash and has no unsecured debt maturities until 2029. The stable outlook reflects S&P's expectation that Rithm's profitability will remain steady and that it will manage its leverage prudently.