New York City-based Byzfunder, a finance firm that specializes in providing capital to small- and medium-sized businesses, is coming to the securitization market to raise $165 million in bonds, its inaugural transaction in this industry.
Due to close on June 4, according to Asset Securitization Report's deal database, Byzfunder Asset Securitization I, Series 2026-1 will sell three tranches of class A, B and C notes. Analysts at Kroll Bond Rating Agency find that the notes have a legal final maturity date of June 15, 2032.
A revolving pool of business loans and merchant advances secures the deal, according to KBRA, and the revolving period ends on May 31, 2029, about 36 months after the initial closing date.
KBRA explained that the business advances do not have fixed terms or payment amounts but have initial purchase price and purchase amounts. Business loans in the pool have a fixed interest rate with options to make daily or weekly payments. Both types of financing in the pool have original expected terms of up to 18 months, KBRA said.
With an additional office in Tampa, Fla., Byzfunder funds its capital financings—such as term loans, receivable advances and lines of credit—through its proprietary risk models, KBRA said.
The classes A, B and C notes have initial credit enhancement levels of 20.06%, 9.95% and 0.50%, respectively.
With A-, BBB- and BB- ratings on classes A, B and C, respectively, the notes will repay investors sequentially, KBRA said. Aside from this subordination, the transaction's structure includes initial overcollateralization of 0.00% of the pool balance. Once that is amortized, however, the required overcollateralization would be at 100.00% of the outstanding pool balance, KBRA said.
There is a non-declining reserve account equaling 0.50% of the aggregate initial principal balance of the notes, which will be funded on the closing date. The notes also have an excess spread of 61.46% before losses, the rating agency said.
Another structural feature are rapid amortization events, built around a calculated receivables yield; a three-month weighted average excess spread trigger of 4.00%; and a delinquency ratio trigger set at 17.00%.
