The Finance Company (TFC), a non-prime auto issuer that specializes in lending to military clients, recently closed its third securitization since 1999.
Rothschild managed the $60 million, 144A offering, which was wrapped to a double-A by Asset Guaranty Insurance (AGI).
AGI also insured TFC's first deal in 1999. Financial Security Assurance wrapped the second transaction, a $100 million deal that closed in September.
"It looks like it's going to be every six months or so, so we'll securitize whenever it makes sense to, when we get the right size portfolio," said President and Chief Financial Officer Ron Tray.
The military loans, which comprise 70% of the portfolio, are standard retail auto contracts, and differ mostly in the way they are serviced.
"It's unique from the standpoint that in the collections and servicing on that kind of payment, it helps to be familiar with the military, and how they're housed, and moved and paid, and we have a group that specializes in that," Tray said.
Interestingly, the military loans tend to be structured on a payment plan aligned with the borrower's remaining service term. The loans are predominantly no-down payment loans, based on the pay grade of the borrower. Most of these loans are set up on an allotment program, whereby the monthly payment is deducted automatically from the account.