First National plans to issue $90 million of bonds backed by a pool of tax liens on real estate properties in Florida, Illinois and South Carolina, according to Kroll Bond Rating.
FNA 2014-1 Trust, First National's second ever tax-lien transaction, will sell a single tranche of AAA’ rated class A bonds that mature on Dec. 10, 2022; the notes are backed by property tax liens secured by 7,651 individual properties.
The transaction also features a new tax lien account totaling $13.5 million at closing, which may be used to purchase tax liens (up to $13.5 million) on new properties that meet certain eligibility criteria by the payment date in June 2015.
First National can also purchase up to $1 million in subsequent liens on properties subject to tax liens that are in the initial collateral pool, as well as those purchased from the new tax lien account. A purchase of subsequent tax liens allows the issuer to retain the sole security interest in the property subject to the tax lien.
However, Kroll stated in the presale report that subsequent tax liens also “expose the issuer to increased risk to a property owner that, at the time of the purchase of the subsequent tax lien, is even more delinquent in paying taxes than when the initial tax lien certificate was originated”.