Arrow Financial Services recently closed its fourth securitization of charged-off consumer receivables - its third issuance from its Master Trust, created in December of 1999. Moody's Investors Service rated the $29.5 million of securities investment grade. This is Arrow's largest deal to date (see ASR 5/06/02).
The transaction was structured with a six-month duration, floating-rate top class and a 12-month duration fixed-rate sub-class, with a weighted average coupon of just over 4%.
Last year Arrow was a successful bidder in a piecemeal auction of the unsecuritized Heilig-Meyers furniture installment loans (those loans were not included in this recent deal). The company is also in the business of first-party billing and collecting for banks and other leading financial institutions.
Standard & Poor's recently ranked Arrow as a strong' Consumer Finance Special Servicer. According to the firm, Arrow is the only such servicer with a strong' ranking.
On August 1, 2002, the company also announced that it secured a $45 million private equity commitment from Parthenon Capital. Michael Valentino, chief financial officer of Arrow, stated, "The addition of Parthenon Capital as a significant owner of the company will result in a company that is more institution in nature." Additionally, as part of the recapitalization, Prudential Financial has exercised its option to purchase shares in Arrow, and has become a minority shareholder.
Arrow's management team privately placed the asset-backed securities, eschewing the use of any underwriter.
The firm is staffed in part by the ex-investment banking team of ContiFinancial, which managed Conti's ownership stake in Arrow prior to the firm's management buyout in late 1999.