Springleaf is prepping a new securitization for $601 million backed by a pool of secured and unsecured personal loans, according to rating agency presales.
Barclays, Citigroup and Natixis are managing the deal, called Springleaf Funding Trust 2015-A.
Standard & Poor’s and DBRS assigned ratings of A+’/ AA’ to the senior notes. The junior tranches are rated BBB’/ A’ , BB’/ BBB’ and B’/ BB’. All the notes have a final maturity date of November 2024.
Although the S&P ratings on the senior notes are two notches below the DBRS rating, S&P ratings on this deal are a notch above where it rated comparable notes in the issuer’s previous transaction, SLFT 2014-A. This is because the current deal has increased the hard credit enhancement on the notes to 26.5% from 23.4%.
The underlying personal consumer loans are installment loans with three- to four-year original terms with a fixed interest rate that varies between 18% to 36% and sizes of up to $10,000. According to the S&P presale, remaining loan terms for the current deal increased to a weighted average 42 months from 36 months in the issuer’s 2014 deal. Also up in this deal is the share of unsecured loans in the pool, reaching 25% from 20% in the 2014 transaction.
In August 2014, S&P raised the issuer credit rating on Springleaf to 'B' from 'B-', reflecting improved leverage and liquidity position. The issuer’s debt-to-equity ratio has declined to 3.1x as of Sept. 30, 2014, from 7.8x a year earlier. Springleaf also reported $2.6 billion in cash and cash equivalents, in addition to $1.2 billion in undrawn loan warehouse capacity as of Sept. 30, 2014.
The issuer operates through a network of nearly 831 branches in 26 states as of Sept. 30, 2014. The branches operate as servicing and collection centers for loans that are originated within the branches. Springleaf relies primarily on a decentralized branch network to originate and service its portfolio of personal consumer loans. However last year the issuer began centralizing all loans that were three or more payments past due to a servicing center located in London, KY, which was acquired from HSBC in 2013, according to the S&P presale.