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The $1 billion securitization includes a $424 million fixed rate Aaa-rated portion with a yield of 5.133% as well as a $424 million floating Aaa-rated portion priced at 110 basis points over the Secured Overnight Financing Rate.
Portfolio managers should consider choosing CLOs and ABS over corporate credit and agency MBS over Treasuries in 2025, says asset manager Janus Henderson.
Loans on used cars, extended to borrowers with prime credit characteristics, make up the reference pool of assets.
Coupons range from 4.4% on the noted rates P1/A1+ from Moody's and S&P, to 5.66% on the notes rated Ba1/BB+.
The deal is structured as a public securitization, under Rule 144A, and is supported by lending indirectly through more than 1,100 partnerships across the country.
Outstanding loans eligible for repossession in December 2022 saw a 22.5% increase from December 2019, but redemptions were higher than pre-pandemic levels.
PAID 2024-PT1 follows a repayment sequence where funds are released to certificate holders after the control class has been paid down to maintain required levels of overcollateralization to the deal.
Consumer credit is deteriorating, but structured credit is well suited to weather the slide.
Those metrics were merely a return to solid pre-pandemic levels and do not suggest a deterioration, says Moody's. Yet a broader, and more weakened employment picture is emerging, SMBC Nikko Securities says separately.
Although the deal will sell just one tranche of notes to investors, those notes benefit from 26.0% in subordination, which comes from a subordinated transferor amount deficit.
With Theorem, Pagaya's fund management business is expected to grow to more than $3 billion of capital
Stubborn inflation is expected to work its way down, but combined with higher-for-longer interest rates, consumers are feeling the effects differently across the credit spectrum.
All three tranches have a May 15, 2030 final maturity date and are expected to yield 5.4% on the three-month interpolated yield curve.
Citing auto sales as a potential leading indicator, observers say the labor market's health might be overstated, while auto ABS assets start to underperform.
The latest securitization coincides with the company announcing a partnership with U.S. Bank to provide personal loans to borrowers.
Direct lenders are trying to get their hands on consumer loans, cutting into banks' business and taking advantage of the sometimes volatile market for asset-backed debt.
The $500 million in notes from the current deal are part of a multi-issuance series consisting of classes A, B, C, and D, with a 21.00% level of credit enhancement on the class A notes.
Direct lenders offer almost guaranteed funding at a time when borrowing in the $1.6 trillion U.S. ABS markets is increasingly unpredictable, and banks nurse losses.
First social bond will serve rural borrowers who mostly earn under $50,000 in net income per year.
Charge-off and payment rates had improved, due to consumer assistance programs and government stimulus funds amid COVID-19 economic slowdowns.
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