Fitch Ratings acted quickly following today’s announcement that Rocket Companies is buying Mr. Cooper Group for $9.4 billion, placing subsidiary Rocket Mortgage on possible downgrade watch. The credit rating agency also said it expects to upgrade Mr. Cooper’s rating by one or two notches when the deal closes.

Based on the companies’ consolidated credit profile when the acquisition is finalized, Fitch may downgrade Rocket Mortgage’s long-term issuer default rating one notch from BBB- to BB+.

Fitch’s ratings are based on the likelihood that a company will meet its financial obligations and be able to repay its debt, such as corporate bond obligations. Its ratings range from AAA, meaning the lowest expectation of default risk, to D, meaning the company is in default. Anything lower than BBB- is considered speculative debt, according to Fitch.

Fitch stated in a rating action commentary that the potential Rocket downgrade would be driven primarily by increased corporate leverage, noting that “the combined company will show a higher leverage appetite than Rocket Mortgage pre-transaction, including increased corporate debt to fund purchases of mortgage servicing rights (MSR).”

At the same time, Fitch sees a possible upgrade of Mr. Cooper’s current BB credit rating due to the “stronger combined business profile.”

Despite the potential Rocket Mortgage downgrade, Fitch said the combined company would be the “leading mortgage franchise in the U.S.”

“The company would combine its significant scale in mortgage origination with Mr. Cooper’s leading scale in mortgage servicing,” the Fitch commentary stated. “Additionally, it would reflect the company’s strong pro forma liquidity, solid asset quality of the servicing portfolio, robust and integrated technology platform and experienced management team.”

The all-stock acquisition is expected to close during the fourth quarter of 2025, according to Rocket Companies.