Securitization

Both forward-flow agreements and the larger asset-backed securitization market are becoming more popular, as consumer debt is growing.

Portfolio enhancements and diversifications cushion the impact of the L.A. wildfires from RMBS losses.

The GMALT 2025-1 securitization has just 24.4% of contracts with original leases longer than 36 months. It's the lowest level for the platform, a credit positive.

Tenants also have a high average credit quality, with 75.9% of them having at least an investment grade rating, and lease assets underlying the class A notes have a loan-to-value (LTV) ratio limited to 70%.

The riskiest portion of the securitization, known as the equity, was placed with investors including sovereign wealth funds, pension funds and family offices

Residential customers made up 70.1% of NYSEG's sales revenue, while commercial and industrial customers account for the other 30% of sales. The latter is a relatively high exposure for such deals.

Unlike previous FIGRE deals where overcollateralization provided credit support to the notes, FIGRE Trust 2025-HE1 has a class G composed of principal-only notes that provide the credit support.

Debt service coverage ratio triggers, including cash trapping and rapid amortization, will provide much of the credit enhancements to the notes.

The deal has a step-up coupon feature that calls for the fixed rates on classes A1, A2 and A3 to increase by 100 basis points, subject to the net weighted average coupon (WAC) after four years.

The multifamily property securities market is expected to stay resilient, despite weaknesses in certain markets due to cooling rent growth, higher vacancy, or oversupply.