Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk
Our debt facilities under the 2024 Credit Agreement and the Residual Finance credit facility bear interest at either a base rate or a SOFR rate plus an applicable margin, each subject to a SOFR floor of 0.50% and 2.00%, respectively. As of December 31, 2025, outstanding borrowings were $1.02 billion under the 2024 Credit Agreement and $35.4 million under the Residual Finance credit facility. Ignoring the applicable SOFR floors, a hypothetical 1.00% increase or decrease in SOFR would increase or decrease cash interest expense by approximately $10.2 million under the 2024 Credit Agreement and $0.4 million under the Residual Finance credit facility. We do not currently hedge our exposure to interest rate risk.
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