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Cazenovia Creek returns with $218M bonds backed by tax liens

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Cazenovia Creek Investment Management is returning the securitization market with $218.8 million of bonds backed by tax liens.

Cazenovia’s first offering was three years ago, in June 2015. The company was subsequently acquired by a wholly owned subsidiary of the Hunt Companies in April 2016. It then acquired a smaller tax lien investment firm, Tax Ease, in August 2017.

Despite the change in ownership, Cazenovia Creek’s original management remains in place and there have been no significant changes in its overall operations, according to Kroll Bond Rating Agency.

The new bond offering is similarly little changed from the previous offering. Cazenovia Creek Funding II will issue two tranches of note: $207.8 million of Class A notes are provisionally rated AAA and $11 million of Class B notes are rated A. All of the notes mature in July 2030.

MTAG Services is again servicing the transaction; but Hunt Financial Services has replaced Guggenheim Securities as the sole structuring adviser and bookrunner. Capital One Securities is again the co-bookrunning manager.

The initial portfolio consists of property tax liens in 11 states that are secured by 55,121 individual properties, with an average redemptive value of $3,620. The largest state concentration in the initial portfolio is Florida (66.5%), followed by Texas (10.3%) and Tennessee (10.2%); by comparison, Cazenovia’s previous deal was secured by liens on properties in just eight states. Residential properties comprise 69.6% of the pool backing the latest deal, while commercial properties, vacant land and agricultural properties account for 25%, 4.7% and 0.7%, respectively.

Another $20 million will be set aside at closing to purchase new tax liens (up to 35% of the initial note balance) on properties over the next 12 months. There will also be $2 million set aside at closing to purchase subsequent tax liens on properties related in the initial pool.

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Esoteric ABS