Mariner Finance is prepping a first-time $225 million asset-backed notes issuance supported by nearly 90,000 subprime and nonprime personal loans, according to a pre-sale report published Thursday by Standard & Poor’s.
Mariner Finance Issuance Trust 2017-A is supported by more than $250 million in both secured and unsecured loans underwritten or acquired by the 300-branch loan and insurance products firm operating in 22 states.
The only rating applied to the deal was S&P’s ‘BBB+’ preliminary structured finance rating on the $189 million Class A note tranche consisting of 12-year fixed-rate notes.
Wells Fargo and Goldman Sachs are the lead managers for the deal, expected to close Feb. 23.
The Class A notes are supported by total initial hard credit enhancement of 26.07%, including 10.8% overcollateralization, a 1% reserve account and 14.27% subordination. CE is boosted to 42.9% with the inclusion of excess spread on the loans with an adjusted principal balance of $252.2 million.
Wells Fargo is the backup servicer.
Mariner Finance has bulked up operations in the last three years by acquiring other lending companies, their loan portfolios or loan products.
At year’s end 2016, the company’s consumer loan portfolio totaled $944 million. The company improved on net losses as a percentage of the unpaid principal balance (6.81%) after rising for four consecutive years.
Most of the 89,914 loans in the new pool are unsecured loans (62.12% of the collateral balance); the portfolio, however, is required to have at least 25% of the aggregate principal balance tied to secured loans that are usually secured by title collateral such as automobiles, according to S&P.
Mariner’s loans are fixed-rate, amortizing loans up to $40,000 that have up five-year terms and APRs of 36% or less. The weighted average annual percentage interest rate for the pool was 27.7% as of Jan. 31, and average loan balance was $2,805. The average FICO was 622.
Mariner targets consumers who need loans for home improvements, vacations, auto repairs, etc. and who have average FICOs from high 500s to high 600s, with an average annual income of $47,000.
The pool will include a two-year revolving period for the issuer to purchase Mariner loans and add to the pool that meet portfolio criteria.