Propel Financial Services is preparing its first securitization of tax liens, according to a presale report published by Kroll Bond Rating Agency.

Kroll has assigned a preliminary ‘AAA’ rating to a single, $134 million tranche with a stated maturity of May 2029 to be issued by PFS Tax Lien Trust 2014-1.

The presale report does not name the deal’s underwriterb.

The initial collateral pool is composed of 15,870 tax liens, located across 128 counties within the State of Texas, with an initial redemptive value of approximately $141.5 million. The weighted average age for the collateral pool is approximately 17.3 months and the weighted average lien to value is approximately 10.6%.

Credit enhancement is comprised primarily of excess spread (approximately 10% at closing), overcollateralization (5.3%, based on the initial redemptive value of the collateral and not taking into account any subsequent tax liens) and cash reserve accounts (approximately 1.0%).

Propel was founded in 2007 and has acquired over $300 million of tax lien receivables since inception, according to the presale report. The Company has foreclosed on 125 properties out of over 30,000 accounts and has never incurred a loss.

Historically, over 30% of the company’s tax liens are repaid within 12 months, while approximately 78% are repaid within four years of origination. The transaction uses an acquisition account to purchase subsequent liens on existing properties within the initial collateral pool, which slows the overall deleveraging of the transaction.

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