Specialized lender Oxford Finance is marketing $325 million of notes backed by loans to life sciences research firms and healthcare services companies.
Oxford Finance Funding 2016-1 LLC will issue tranches of notes: $285 million of class notes with a preliminary ‘A’ rating from Kroll Bond Rating Agency a $39 million of class B notes rated ‘BBB’. The class A notes TKTKT include a 73% advance rate on the adjusted pool balance which constitute an overcollateralization of 27%.
Life sciences loans are the bulk (85.5%) of the $390.4 million pool of loans used as collateral. These loans have attributes unique to corporate loans: they are secured by pledges largely from intellectual property of the technology and research being developed by the firms. Loan-to-value ratios are also kept low, in this case 21.7% in the life sciences portion of the pool, so as to allow the loans to be repaid under alternative exit strategies.
The remainder of the collateral consists of healthcare services loans, which are underwritten based on cash-flow trends and accounts receivables collections.
All of the loans are between $1 million and $12 million, with an average outstanding balance of $6.1 per obligor and $5.2 million per loan. The loans are almost evenly split between fixed-rate (49.5%) and floating-rate (50.5%) terms.
Barclays is the bookrunner on the transaction, which will include a 24-month reinvestment period allowing principal collections to be reinvested into additional loans.
The structure includes a $4.86 million reserve account.
Oxford 2016-1 is larger than the company’s last securitization of $204 million in 2014.
Oxford is aprivate company 48.75% controlled by Sumitomo Corp. and private investment firm Welsh, Carson, Anderson & Stowe.
Alexandria, Va.-based Oxford Finance is a longtime underwriter of life sciences research and healthcare services finance, originating 1,300 loans totaling $3.4 billion since 2002. The 2016-1 esoteric ABS is the first securitization for Oxford since 2014, and raises the total the company has raised in the capital markets to approximately $933 million since 2011.