The Point Securitization platform is preparing to raise $346.4 million in asset-backed securities (ABS), backed by a large pool of home equity investment agreements.
BOAC HOWL Point Securitization Holdings is the seller and co-sponsor of the deal, which is slated to close on February 20, according to Morningstar DBRS.
Point Digital Finance originated the underlying home equity contracts, composed of first lien (11.1%), primarily second-lien (82.9%) and third liens (5.81%) on residential properties, DBRS said. They have original terms of 30 years.
In terms of the deal's capital structure, Point Securitization 2026-1 will sell notes through four class A and B tranches. All the notes have a stated maturity date of February 2026, DBRS said.
Classes A1, A2, B1 and B2 have cumulative advance rates of 67.9%, 82.4%, 92.4% and 100%, respectively, DBRS said.
Home equity agreements are subject to asset-based underwriting techniques, in which greater emphasis is placed on the value of the underlying property, and the amount of equity in the property, rather than the homeowner's credit quality.
Point Securitization Trust, series 2026-1, will repay investors sequentially through a senior-subordinate structure, DBRS said.
Should a credit event occur, payments will be made first to the interest amounts and interest carryover on class A1 notes, and if they have not been redeemed or paid in full by the redemption date, the A2 notes accrual amount would be paid to the class A1 notes until they have been reduced to zero.
If the class A1 notes have been redeemed or paid in full, then the accrual amount will be paid to the class A2 notes. The deal will follow that order through the rest of the structure until the amounts are paid off.
Barclays, Nomura and Cantor Fitzgerald are among the initial note purchasers, according to DBRS. and Point Digital Finance is the servicer, DBRS said.
DBRS expects to assign final ratings of (P) A (low) (sf), (P) BBB (low) (sf), (P) BB (low) (sf), and (P) B (sf) to classes A1, A2, B1 and B2.
