Another business development company has tapped the securitization market to fund additional lending.
Horizon Technology Finance Corp., a specialty finance company that lends to venture capital and private equity-backed technology and healthcare start-ups, said Monday it securitized $189 million of secured loans in its portfolio.
The deal, Horizon Funding Trust 2013-1, issued $90 million of notes that are rated ‘A2’ by Moody’s Investors Service.
Guggenheim Securities acted as arranger of the notes, and Horizon is the sponsor, originator and servicer for the transaction.
"We are pleased to complete Horizon's first securitization," chief financial officer Christopher M. Mathieu said in a press release. He said the notes bear interest at a fixed interest rate of 3.00% per annum and have a stated maturity date of May 15, 2018. The transaction reduced and fixed the interest rate on 68% of the company’s borrowings.
A number of business development companies have securitized loans in their portfolios, issuing senior notes and using proceeds to make new loans while retaining the subordinated tranches. These deals are often structured as collateralized loan obligations, which can be actively managed. Horizon’s deal is described in Moody’s presale report as being backed by a static pool of loans.
Horizon is a business development company that provides secured loans to development-stage companies backed by established venture capital and private equity firms within the technology, life science, healthcare information and services, and clean-tech industries.