Italy's Mediobanca is securitizing €900 million (USD$1.02 billion) of personal consumer loans domestically originated through its Compass Banca S.p.A. affiliate.
Two tranches of senior Class A notes will be issued in the transaction, called Quarzo S.r.l. – Series 2018: both Class A1 and A2 tranches pay floating rates pegged to Euribor; while $153 million Class B notes will be partially used to fund a €3.37 million reserve account.
DBRS has assigned an AA rating to the Class A notes, while Moody's Investors Service assigned its comparable Aa3 rating. Neither agency is rating the Class B tranche.
The transaction is the eighth by Mediobanca di Credito Finanziario S.p.A and Compass through the Quarzo platform. Mediobanca/Compass has been issuing personal loans for more than 20 years in Italy, and has a 13.4% market share.
Mediobanca is lead manager in a syndication group that includes Banco Santander, Unicrecit and Société Générale.
The loans are issued for various purposes, including personal finance and new/used auto loans. The company’s consumer loan originations totaled €13.4 billion as of June 2018. Personal loans account for 58.2% of the portfolio, ahead of salary assignment loans (15.1%), auto loans (14.8%), credit cards (5.4%) and special-purpose loans (6.5%), according to DBRS.
Personal loans tend to have higher balances, higher coupons and a higher term when compared with other Italian consumer lending products, according to DBRS.
Moody's projects defaults to reach 6% of the original principal balance over the life of the transaction.
The notes are backed by 104,640 accounts with an average outstanding balance of €8,600 and an average interest rate of 9.1%. The loans have original average terms of 61.9 months, with 4.8 months of seasoning.
The deal will include a six-month revolving period during which additional eligible accounts may be added to the pool of collateral.
