Debt

3 Months Ended

Mar. 31, 2020

DebtOn May 24, 2018, we entered into a credit agreement (2018 Credit Agreement), which provides for (i) a $150 million five-year senior secured term loan facility (2018 Term Loan) that matures on May 24, 2023; and (ii) a $85 million three-year secured revolving credit facility (2018 Revolving Credit Facility) that, prior to amendment as discussed below, would have matured on May 24, 2021. Proceeds from the 2018 Term Loan were used to repay in full the outstanding amount due under our $150 million amended term loan (2015 Term Loan) due on November 10, 2019, and to pay fees and expenses incurred in connection with the 2018 Credit Agreement. On March 20, 2020, we amended the 2018 Revolving Credit Facility (2020 Revolving Credit Facility), increasing the borrowing capacity under the facility to $100 million, extending the maturity date from May 24, 2021 to February 22, 2023, and reducing the interest cost related to both undrawn commitments and drawn borrowings

under the facility.

2018 Term Loan

The 2018 Term Loan bears interest at the LIBOR, as defined in the 2018 Credit Agreement and subject to a 1.00% floor, plus an annual margin rate of 4.75%, representing an all-in rate of 5.75% as of March 31, 2020, payable monthly based on our current interest period election. Quarterly principal payments of $0.4 million are also required. As of March 31, 2020, the outstanding principal balance of the 2018 Term Loan was $147.4 million.

Interest expense for the 2018 Term Loan includes interest and the amortization of issuance costs, an original issue discount and capitalized modification costs related to the 2015 Term Loan. For the three months ended March 31, 2020, we recorded $2.5 million of interest expense. Remaining unamortized issuance costs and original issue discount were $1.9 million as of March 31, 2020 and are being amortized to interest expense using the effective interest method over the contractual life of the 2018 Term Loan.

We are subject to certain covenants under the 2018 Term Loan (as defined in the 2018 Credit Agreement), including (but not limited to) a maximum debt-to-total capitalization ratio (as defined in the 2018 Credit Agreement) of 35% under the 2018 Term Loan. We were in compliance with all covenants as of March 31, 2020.

Future principal payments due under the 2018 Term Loan as of March 31, 2020 are as follows:


As of March 31, 2020	Principal
	(In thousands)

2020	1,125
2021	1,500
2022	1,500
2023	143,250
Total	$	147,375

2020 Revolving Credit Facility

Borrowings under the 2020 Revolving Credit Facility accrue interest at a variable rate equal to, at our discretion, based on the applicable corporate credit rating at the time, (i) a base rate (as defined in the 2018 Credit Agreement, subject to a floor of 1.00% per annum) plus a margin of 0.375% to 1.875% per annum, which is reduced from a margin of 1.00% to 2.50% prior to the amendment, or (ii) the Eurodollar Rate (subject to a floor of 0.00% per annum) plus a margin of 1.375% to 2.875% per annum, which is reduced from a margin of 2.00% to 3.50% prior to the amendment. As of March 31, 2020, no borrowings had been made under the 2020 Revolving Credit Facility.

Under the 2020 Revolving Credit Facility, we are required to pay a quarterly commitment fee on the average daily undrawn amount, which ranges from 0.175% to 0.525%, reduced from ranges of 0.30% to 0.60% prior to the amendment, based on the applicable corporate credit rating at the time. As of March 31, 2020, the applicable commitment fee was 0.35%. For the three months ended March 31, 2020, we recorded $0.1 million of commitment fees in interest expense.

We incurred issuance costs of $0.8 million in connection with the 2020 Revolving Credit Facility, which together with the remaining issuance cost of $0.6 million prior to the amendment, are amortized through interest expense over the extent contractual life of the 2020 Revolving Credit Facility, on a straight-line basis. For the three months ended March 31, 2020, we recognized $0.1 million of interest expense from the amortization of deferred issuance costs. At March 31, 2020, remaining deferred issuance costs were $1.4 million, net of accumulated amortization.

We are subject to certain covenants under the 2020 Revolving Credit Facility, including (but not limited to) the following: a maximum debt-to-total capitalization ratio of 35%, a minimum liquidity requirement, compliance with the PMIERs financial requirements (subject to any Fannie Mae and Freddie Mac (collectively, the GSEs) approved waivers), and minimum consolidated net worth and statutory capital requirements (respectively, as defined therein). We were in compliance with all covenants as of March 31, 2020.