In a first of its kind deal, Paragon Acceptance Corp. has closed a securitization of residual interests in securitized auto portfolios, a $13.5 million transaction structured in the form of residual interest notes and privately placed by Descap Securities Inc.
The asset-backed securities were sold in one tranche and rated BBB by Duff & Phelps Credit Rating Co. The notes carried a 9.79% coupon and were reportedly purchased by two institutional investors. Paragon has retained a subordinated certificate below the Class-A notes.
The deal is backed by residual interests in Paragon's four outstanding securitizations and is structured as a sequential pay transaction.
Paragon said it believes this is the first rated securitization of residuals for auto loans.
- Dave Feldheim