Loans to small and medium-sized businesses will provide the collateral for $120 million in asset-backed securities (ABS) that Mulligan Asset Securitization II is bringing to market.
The series 2024-1 notes from the transaction will be San Diego Calif.-based Mulligan Funding's second securitization. The San Diego, Calif.-based deal sponsor provides working capital to smaller companies using its proprietary risk scoring model, according to analysts at Kroll Bond Rating Agency. The transaction will issue notes through three tranches of class A, B, and C notes, all of which have a Nov. 15, 2031 legal final maturity date.
Mulligan Asset Securitization II will issue expandable notes. At any time during its 36-month revolving period and if certain conditions are met, it can upsize the existing notes, to a maximum of $500 million, KBRA said.
The class A, B and C notes have credit enhancement levels of 15.35%, 6.30% and 0.75%, respectively.
In terms of how the series 2024-1 compares with the inaugural deal, the initial pool size is larger than the $103.8 million on the inaugural 2023-1 deal, according to KBRA. Mulligan's core market is typically companies that generate $750,000 to $50 million in annualized revenue. While some companies generate as little as $95,000, Mulligan does not provide start-up or venture capital, KNRA said.
The deal structure includes excess spread, before losses, of about 35.25%. A reserve account, non-declining, is in place that equals 0.75% of the aggregate note balance.
Other enhancements include subordination, interest rates that are paid sequentially ahead of all principal payments, but not paid during the revolving period. After the revolving period, the trust will pay principal in full turbo sequential order, KBRA said.
Mulligan also has four performance triggers in place that will set off raid amortization, and they are based on the calculated receivables yield, excess spread, the delinquency ratio and a partial call feature, the rating agency said.
Specialty trade contractors; professional, scientific and technical services, and food services and drinking places. They represent 16.64%, 10.84% and 10.39% of the pool, respectively.
The pool appears to be geographically diverse, too, with California accounting for the largest portion of loans, at 17.25%.
KBRA assigns A, BBB- and BB- to classes A, B and C, respectively.
