Newtek Business Services Corp., a business development company, said Monday it completed the securitization of $40.8 million of the unguaranteed portion of loans made under the Small Business Administration’s 7(a) program.
This is Newtek's sixth SBA loan securitization, and the largest to date; it and was accomplished as an amendment and supplement to its 2010-1 securitization.
The notes issued by the securitization trust are collateralized by the right to receive payments and other recoveries attributable to the non-guaranteed portions of SBA 7(a) Loans made by Newtek Small Business Finance, and are overcollateralized by NSBF's participation interest in the non-guaranteed interests. They are rated ‘AA’ by Standard & Poor’s.
Sandler O'Neill + Partners L.P. acted as the placement agent for the sale of the notes, which were placed with five institutional investors, three of whom were new to Newtek's securitization investment program.
The notes were priced and sold to investors at a yield of 2.5%, which represents an approximate 100 basis point reduction in the overall yield since the company's last securitization transaction priced.
S&P rated the Notes as 'AA' based on the collateral in the entire, upsized pool.
In a press release, Barry Sloane, chairman, president and chief executive of Newtek Business Services, attributed the improved pricing to the credit performance of loans made by the firm and the size of the transaction.
"At the conclusion of this financing, the outstanding balance of our $50.0 million Capital One Bank N.A. revolving credit facility, representing advances with respect to non-guaranteed 7(a) loans, was fully paid down, which coupled with our recent $8.2 million bond offering, increases our access to capital and our ability to continue to grow our loan fundings,” Sloane said.
“We look forward to continuing to grow our loan originations and potentially bringing larger more frequent securitizations to the market."