Despite a tough year end for the nonperforming consumer-debt sector, Arrow Financial Services LLC came to market in December with a privately placed $16.4 million transaction, and plans to issue again later this year.
"There were three or four deals in the marketplace towards the last quarter and I think ours was the only one, according to the rating agencies, that actually got done," said Arrow Chief Financial Officer Michael Valentino.
The deal was divided into two tranches. The $11.1 million, A-1 class has a 0.37-year average life and was rated A-plus by Duff & Phelps Credit Rating Co.
The second tranche, the $5.3 million, fixed-rate A-2 class, has an average life of 1.08 years and was rated A by Duff & Phelps.
Arrow may do another $15 million to $17 million deal in September. "We've been coming to market every six to nine months," Valentino said.
"We've already set up a master trust structure that seems to work quite well," he said. "We basically segregate the portfolios that we purchased in the past and the current portfolios that are being financed against the series. We overcollateralize the entire trust and all future ones by portfolios that have previously paid off."
Arrow, at the time linked with ContiFinancial Services Corp., last came to market with a $12.8 million transaction in May. The three-tranche deal, which had life expectancies that ranged from 0.53 year to 1.40 years, was paid off in December.
"I think it's important to note that given all the problems in the sector and the end-of-year crunch, we were still very pleased to get our deal done in a very expeditious manner," Valentino said.