Affirm Holdings, Inc., the San Francisco, Calif.-based consumer financial services company is sponsoring its third asset-backed securitization (ABS) this year, a $500 million deal collateralized by payments on point-of-sale unsecured consumer loans.
The transaction, Affirm Asset Securitization Trust 2021-B, is the sixth rated term asset-backed deal from the company. Founded in 2012, Affirm allows online shoppers to pay for their purchases through three- to 12-month installments, according to the company’s website.
Affirm’s capital comprises five classes of notes, which will begin making distributions on October 15, 2021 and which have a maturity date of August 2026, according to DBRS | Morningstar. The rating agency expects to assign ‘AA’ ratings to the $418.7 million class A notes; ‘A’ to the $28 million class B notes and ‘BBB’ to the $19.7 million class C notes. DBRS expects to rate the final two tranches are rated ‘BB’ and ‘B’.
In January 2021 Affirm Holdings went public in a deal that it expected to provide $1.2 billion in gross proceeds, according to a statement from Affirm at the time of the transaction. The current deal is the sixth securitization since it launched the ABS program in July 2020, according to the company.
Affirm expects the 2021-B securitization to provide greater flexibility to support its growth plans in 2021 and beyond, Michael Linford, Affirm’s chief financial officer said in a statement.
“This type of ‘buy now, pay later’ lending is definitely here to stay and investors have embraced it given the short loan tenor, relatively small balance size and high credit quality of the borrowers,” said John Kerschner, head of securitized products at Janus Henderson. “I would expect to see further issuance from both Affirm and its competitors.”
Affirm’s latest securitization comes as Square announced a $29 billion acquisition of competitor Afterpay, although it is unclear whether Afterpay has any plans to raise funds from the ABS market in association with costs from the IPO, or for other purposes.
Barclays Capital was lead bookrunner and structuring agent. Other parties on the deal included J.P. Morgan and Truist Securities as joint bookrunners, while Morgan Stanley, Regions Securities and R. Seelaus & Co., as co-managers.
