v3.26.1
BORROWINGS
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
BORROWINGS BORROWINGS
The following table sets forth the Company’s outstanding borrowings as of the date indicated (in thousands):

June 30, 2026December 31, 2025
Secured borrowing
$252,995 $193,892 
Exchangeable notes150,070 148,782 
Long-term debt471,866 481,598 

The Company was in compliance with all covenants as of June 30, 2026 and December 31, 2025.

Secured Borrowing
Secured borrowings are comprised of borrowings under risk retention master repurchase agreements and the Company’s receivable facilities. Interest expenses related to secured borrowings was $3.8 million and $6.2 million for the three months ended June 30, 2026 and 2025, respectively, and $7.2 million and $12.1 million for the six months ended June 30, 2026 and 2025, respectively.

Risk Retention Master Repurchase

In the normal course of business, the Company, through consolidated VIEs, enters into repurchase agreements to finance the Company’s risk retention balance in securitization notes and residual certificates retained from securitization transactions. Under these agreements, the Company sells its investment securities with an obligation to repurchase them in the future. These agreements generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. As these agreements contain repurchase obligations, they are accounted for as secured borrowings with the sold investment retained on the unaudited condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the outstanding principal balance under the repurchase agreements was $160.8 million and $107.8 million, respectively, which is recorded within secured borrowing on the unaudited condensed consolidated balance sheets, with a weighted average interest rate of approximately 9% percent and 10% percent, respectively. The average remaining contractual maturities of the repurchase agreements were greater than 90 days as of both June 30, 2026 and December 31, 2025.

Receivables Facility

In April 2025, Pagaya Structured Products LLC, a wholly-owned subsidiary of the Company, entered into a Loan and Security Agreement (the “LSA Agreement”) with a certain lender. This agreement established a 24-month Capitalized Interest Amounts Facility (the “CIA Facility”) with a maximum principal amount of $24 million to finance eligible capitalized interest amounts related to sponsored securitization transactions. In March 2026, the maximum principal amount under the CIA Facility was increased to $30 million.

Additionally, in June 2025, Pagaya Structured Products LLC entered into a 30-month Accrued Loan Purchasing Fee Receivables Facility (the “ALPF Facility”) with a maximum principal amount of $65 million, to finance certain eligible fee receivables from sponsored securitization transactions. Borrowings under the CIA Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 4.00%, while borrowings under the ALPF Facility bear interest at a rate per annum equal to the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 1.9%. As of June 30, 2026 and December 31, 2025, the combined outstanding principal balance under the CIA Facility and ALPF Facility was $93.5 million and $87.0 million, respectively, which is recorded within secured borrowing on the unaudited condensed consolidated balance sheets.

Exchangeable Notes

On October 1, 2024, the Company, through a wholly owned subsidiary of the Company, issued $160 million aggregate principal amount of its 6.125% Exchangeable Notes due 2029 (the “2029 Notes”). The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers. The 2029 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025. The 2029 Notes will mature on October 1, 2029, unless they are repurchased, redeemed or exchanged prior to that date.

During the first quarter of 2026, the Sales Price Contingent Exchange Condition was met as the closing sale price of the Company’s Class A Ordinary Shares exceeded $18.19 (130% of the exchange price, $13.99) for the required period and, as a result, noteholders were entitled to exchange their 2029 Notes during the second quarter of 2026. During the second quarter of 2026, the Sales Price Contingent Exchange Condition was not met and, as a result, noteholders are not entitled to exchange their 2029 Notes during the third quarter of 2026. As of June 30, 2026, no holders had elected to exchange their 2029 Notes.

The Company accounted for the issuance of the 2029 Notes as a single liability at par as the conversion feature does not require bifurcation as a derivative under ASC 815 and the 2029 Notes were not issued at a substantial premium. Debt issuance costs consisting of underwriting fees and third-party offering costs, totaled $6.2 million. Original Issue Discount (“OID”) totaled $8.0 million. Both issuance costs and OID are amortized to interest expense using the effective interest method over the contractual term of the 2029 Notes. The Company recorded interest expense of $3.1 million and $6.2 million for the three and six months ended June 30, 2026, respectively, compared to $3.1 million and $6.1 million for the three and six months ended June 30, 2025, respectively. Interest expense included amortization of debt issuance costs of $0.7 million and $1.3 million for the three and six months ended June 30, 2026, respectively, and $0.6 million and $1.2 million for the three and six months ended June 30, 2025, respectively. The effective interest rate of the 2029 Notes is 8.5%.

Long-Term Debt
Senior Notes

On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, completed the issuance of $500 million aggregate principal amount of Senior Unsecured Notes due 2030 (the “2030 Notes”). The 2030 Notes bear interest at a rate of 8.875% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The 2030 Notes will mature on August 1, 2030, unless earlier repurchased or redeemed.

At any time prior to August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a make-whole premium described in the indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On and after August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at the redemption prices set forth in the indenture.

The following table details the 2030 Notes as of June 30, 2026 and December 31, 2025 (in thousands):

June 30, 2026December 31, 2025
Principal amount$481,865 $493,085 
Less: Unamortized issuance costs(9,999)(11,487)
Carrying amount$471,866 $481,598 

The Company recorded interest expense of $11.4 million and $22.6 million, including $0.6 million and $1.2 million of amortization of debt issuance costs, for the three and six months ended June 30, 2026, respectively.

In February 2026, the Company repurchased $7.4 million of the outstanding 2030 Notes at a price equal to 87.3% of the principal amount. The Company paid total consideration of $6.5 million, excluding accrued interest, resulting in a $0.8 million gain on extinguishment of debt. This gain is net of the unamortized issuance costs and is recognized within gains and (losses) from extinguishment of debt on the unaudited condensed consolidated statements of income.

In May 2026, the Company repurchased $3.8 million of the outstanding 2030 Notes at a price equal to 78.5% of the principal amount. The Company paid total consideration of $3.0 million, excluding accrued interest, resulting in a $0.7 million gain on extinguishment of debt. This gain is net of the unamortized issuance costs and is recognized within gains and (losses) from extinguishment of debt on the unaudited condensed consolidated statements of income.

2025 Revolving Credit Facility

On October 1, 2025, the Company refinanced its revolving credit facility by way of terminating its prior credit agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions. The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million. Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% and (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%. A commitment fee accrues on any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions.

As of June 30, 2026, the Company had no borrowings outstanding, following the full repayment of the outstanding balance during the second quarter of 2026, with $17.0 million in letters of credit issued. As a result, $115.0 million of borrowing capacity remained available under the 2025 Revolving Credit Facility as of June 30, 2026.
As of December 31, 2025, the Company had no borrowings outstanding, with $16.1 million in letters of credit issued. As a result, $115.9 million of borrowing capacity remained available under the 2025 Revolving Credit Facility as of December 31, 2025.