Splitero Trust is preparing to sell $255 million in securitized debt related to a large pool of first, second and third liens.
Splitero and BOAC HOWL Splitero Securitization Holdings are sponsoring the deal, secured by home equity investment agreements. The contracts allow homeowners to draw down on equity in their homes without having to sell the home or make monthly mortgage payments, according to Morningstar DBRS.
In exchange for an upfront disbursement, the homeowner gives an investor a stake in the property, which earns the investor a return based on the property's future value, DBRS said. This group of 2,193 contracts have original terms up to 30 years, the rating agency said.
With HEI, underwriting for the loan is based on the property, with less emphasis placed on the borrower's credit quality than on the home equity amount, DBRS said.
The transaction will issue notes through four tranches of class A and B notes, which all have a legal final maturity date of November 2055, according to DBRS.
Barclays Capital, Nomura Securities International and Cantor Fitzgerald are initial note purchasers for the deal, which is slated to close on November 25.
According to the capital structure, the notes will repay investors sequentially following a senior-subordinate plan and offer rates ranging from 5.75% on the class A-1 notes to 5.50% on the class B-2 notes, the rating agency said.
All the contracts in the asset pool were originated between 2024 and 2025, according to DBRS. A large majority, 86.2%, are second-lien contracts that have a weighted average (WA) multiple share rate of 2.00x. Other than that, 10.2% of the contracts are in first-lien position and have a WA multiple share of 2.00x, and 3.6% of the pool are third-lien contracts with a WA multiple share rate of 2.00x.
The A1, A2, B1 and B2 notes have cumulative advance rates of 69.0%, 85.9%, 90% and 100%, respectively.
DBRS ratings on the notes range from (p) A (low) (sf) on the A1 notes to (p) B (sf) on the class B2 notes.
