Real estate tax liens from properties in 11 states are providing the revenue backing $51.8 million in asset-backed securities (ABS), as PVOne Capital prepares to sell the bonds through the PVOne 2025-1 trust.
The sponsor returns to the market after 18 months, when it debuted by selling significantly more, $154 million through two series of notes, according to Asset Securitization Report's deal database.
Proceeds to buy a portfolio of 5,558 property tax lien assets from municipalities in states including Ohio, Illinois and New Jersey. Those three states account for 39.1%, 37.9% and 8.4% of the pool balance, respectively, according to a pre-sale report from the Kroll Bond Rating Agency. The liens repay the notes after the property owner redeems the lien and repays the redemption value plus any accrued interest and penalties.
PVOne includes a subsequent tax lien account with a total of $6 million deposited at closing, KBRA said.
Capital One Securities is the sole structuring advisor on the deal, which closes at the end of this month, KBRA said.
KBRA assigns AAA and A to classes A and B, respectively.
Classes A and B notes pay principal and interest on a pro rata basis without any leakage to equity, KBRA said. The capital structure also includes event-related triggers, which will speed up principal payments to the class A notes, ahead of the class B notes, also on a pro rata basis, if those triggers are breached, the rating agency said.
Tax liens have so-called super priority in repayments, even placing ahead of a previously filed mortgage, KBRA said. In a further boon to the notes' credit, the collateral pool assets have an original lien rate of 10.0%, and a lien-to-value (LTV) ratio of 11.3%, both on a weighted average (WA) basis. So, the combination of a high propriety debt with a low LTV profile is seen as a strong credit characteristic.
Notes get credit enhancement from overcollateralization representing 7.5% of the pool balance, relative to the tax liens' redemptive value, expense and working capital reserve accounts. Also, the class A notes get subordination 4.3% of subordination protection from the class B notes.
PVOne also has two reserve accounts totaling $1.3 million, one for expenses that covers interest and fees at closing, and a working capital account for lien administration expenses, KBRA said.
