Barclays

Total sales of new asset-backed securities are projected to reach $280 billion next year, edging out the $277 billion forecast for this year, strategist Powell Eddins wrote in an Oct. 31 note.

Home equity investment (HEI) agreements homeowners receive upfront cash payments in exchange for giving an investor a stake in the property and the right to collect returns.

The notes benefit from several credit boosters. At closing credit enhancement to the class A notes will be 21.70% of the initial pool balance, plus the pre-funding amount, and could build to 24.30% or greater.

Just one class of variable funding notes (VFN), which have an anticipated repayment date of July 2026, will be issued to investors.

Credit enhancement to the class A notes includes a non-declining overcollateralization of 4.75% of the initial adjusted pool balance, and a non-declining reserve fund of 0.25% of the initial adjusted pool balance.

Backed by revenue from point-of-sale unsecured consumer loans, the upsized deal also features expandable notes.

Yields on longer-dated debt are so high that even if the Fed continues hiking for longer investors still feel they'll be compensated.

MFA has a step-up coupon for the senior classes, where after four years they pay the lesser of a 100 basis-point increase to the fixed coupon, or the net WA coupon rate.

Par subordination on the 'AAA'-rated notes was 39.95%, while par subordination on the 'BBB' notes are expected to be 14.36%.

While the collateral pool consists of a mix of fixed- and adjustable-rate mortgages, CHNGE Mortgage 2023-4's notes are priced to the three-month interpolated curve.