Two years after its inaugural whole business securitization, NBC Funding is returning to raise $110 million from investors. The deal is slated to close on September 29.
Nothing Bundt Cake, which operates and franchises bakeries that specialize in selling high-end specialty bundt cakes, will pledge its domestic and revenue-generating assets to repay the notes, as it did in its debut deal in 2021. Just one class of variable funding notes (VFN) will be issued to investors, according to Asset Securitization Report's deal database. VFNs usually have a fixed maturity, with regular coupon setting dates, but that differ from floating-rate bonds because they don't have fixed margins. They are also payable on demand.
Barclays will manage the transaction, according to ASR, where interest on the notes are payable on a pari-passu basis with classes A1, A2 and class B notes from the same program's 2021-1 deal, according to Kroll Bond Rating Agency. Ratings analysts there were the only ones to rate the NBC Funding notes, according to the ASR database. The company said it assigned ratings of 'BBB-' to the notes, which have an anticipated repayment date of July 2026. The notes have a final maturity date of July 2051.
Business at Nothing Bundt Cake has been expanding since the Q1 2021 cutoff period for the first securitization, according to KBRA. As of Q2 2023, when the most recent information was available, the total bakery count was 511, up from 387 when in Q1 2021, the rating agency said. System-wide sales were $678 million for the twelve-month period ending Q2 2023, up from about $467 million in Q1 2021, ahead of the July 2021 securitization.
By the end of the second quarter same-store sales, which tracks sales at the same location over about a one-year period, were up 6.5% and 5.4% for franchise and company-owned locations, respectively, KBRA said. Recent same-store sales trends have been positive, KBRA notes, but during the history of the securitization program those patterns have been more inconsistent. Sales at company-owned stores dipped to -5.0% in Q3 2021, and were in negative territory again in Q1 2022 and Q2 2022. They have been positive since Q3 2022.
Sales at franchised stores have generally been positive since Q3 2021, except for flat sales in Q4 2022.
