Revenue from a large pool of home equity investment agreements on first, second or third liens on residential properties will be pledged to repay $139.4 million in notes to be issued from investors in the Point Securitization Trust, 2023-1.
Point Securitization Trust 2023-1 will bring the notes to market for an October 27 closing date, according to the Asset Securitization Report's deal database. The trust will be repaid on a sequential basis, according to a pre-sale report from DBRS Morningstar. Point Digital Finance originated the loans and will act as servicer and the deal's co-sponsor.
Home equity investment (HEI) agreements homeowners receive upfront cash payments in exchange for giving an investor a stake in the property. The deal allows homeowners to extract value from their homes without having to sell them or make monthly payments, DBRS explained. While the homeowner retails the sole right of occupancy, and pays all upkeep and expenses during the term of the investment, the originator gets a return based on the home's future value. Returns are subject to a cap, however.
All of the notes have a stated maturity date of November 2053.
Barclays, Cantor Fitzgerald, Nomura Securities International and SunTrust Robinson Humphrey Capital Markets are managers on the deal, according to the ASR database. Some 1,577 home equity agreements are in the pool, with original maturities of 30 years, according to the database. The deal consists of two tranches of notes, benchmarked to the three-month interpolated yield curve, the database said.
Talk around spreads are coming within a range of 450 basis points over the three-month I-Curve on the A1 notes to 625 bps over the benchmark on the A2 notes, according to the database. DBRS is the only agency expected to assign ratings, at press time, and it assigns 'A' and 'BBB' to the A1 and A2 notes, respectively.
Subordination provides credit enhancement to the deal, according to DBRS.
