Tuesday, 18 September 2018

OneMain, Exeter offer up subprime deals

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Subprime offerings from auto group Exeter Auto Receivables and consumer finance group OneMain Financial are among at least eight deals expected to price in the US ABS market this week.

Exeter’s US$450m deal, called EART 2015-2, and OneMain’s new US$500m trade, called OMFIT 2015-2, are both expected to price tomorrow.

Price talk is out on Exeter’s deal at EDSF plus 105bp–110bp for the top-rated tranche, and Swaps plus 440bp area for the bottom rated portion.

That’s in line with Exeter’s previous issue in February, which came under pressure amid a push-back on smaller trades, leading the most junior double B rated D class to price at Swaps plus 440bp – 15bp wider than talk.

OneMain’s issue is its first since subprime lender SpringLeaf agreed to buy the business from Citi for US$4.25bn in March.

OneMain’s fourth-ever securitization of non-prime and subprime personal loans, the deal comes as year-to-date consumer loan securitizations approach triple the volume seen over the same period in 2014, according to IFR data.

Comprising a US$360m senior tranche and three subordinated slices each under US$50m, with S&P ratings ranging from A+ to B, the deal should pique the interest of a buyside looking for opportunities at the lower end of the rating spectrum.

“Non-AAA ABS have widened over the course of the year to a point where the incremental spread from AAA to non AAA is fairly attractive,” said Ken Purnell, a senior portfolio manager at Invesco.

“We haven’t been involved in unsecured consumer financing so far, but the sector is evolving and there might be some opportunities down the road,” he told IFR.

The collateral is broadly in line with OneMain’s three previous series, with an average FICO score of 640, average balance of around US$6,500 and an APR of close to 26%, according to S&P’s pre-sale report.

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