Small business loans and financing tied to company sales will collateralize a pool of $250 million in notes coming to market from the Kapitus Asset Securitization V trust.
Strategic Funding Source, the old name of Kapitus, which is the deal sponsor, provides working capital to small and medium-sized businesses in the U.S. The company has arranged funding totaling $7.2 billion to more than 52,000 unique merchants, according to Kroll Bond Rating Agency.
The sponsor comes to market during heightened risks of economic disruption stemming from ever-shifting U.S. tariff policies. If economic instability does ensue, that could spark higher unemployment and recessionary pressures that lead to negative credit performance that show up in higher delinquencies, defaults or modifications.
All four tranches of the series 2025-1 notes, composed of class A, B, C and D notes, have a legal final maturity date of April 12, 2031, KBRA said. The notes are expendable, according to the rating agency. At any point during the revolving period, the issuer might upsize the current notes to a $500 million limit, if the transaction meets certain requirements, and the del gets rating agency confirmation.
The transaction will pay interest on the notes sequentially, and will not pay any principal during the revolving period. After the revolving period, principal will be paid on a full-turbo sequentially.
The notes benefit from gross excess spread of 33.3%, plus a rapid amortization feature that will trigger a paydown process if excess spread is not maintained above certain levels.
Kapitus also benefits from overcollateralization, with a requirement of 4.4% of the pool balance. There is also a non-declining reserve account, funded with an amount equal to 0.50% of Kapitus' pool balance.
SunTrust Robinson Humphrey Capital Markets is manager on the deal, which is slated to close on May 5, according to Asset Securitization Report's deal database.
Initial credit enhancement levels amount to 40.3%, 27.8%, 14.0% and 4.9% on classes A, B, C and D, respectively.
