Six months after being acquired by Blackstone, Exeter Finance Corp. has completed its first-ever securitization ― a $200 million transaction that was privately placed with investors.
The securitization consisted of four tranches, with DBRS ratings ranging from triple-A through double-B, and Standard & Poor’s ratings ranging from double-A through double-B. The weighted average coupon was 3.7%.
Wells Fargo Securities and Deutsche Bank Securities were lead managers on the deal; Citigroup and Credit Suisse were co-managers.
“We’re very pleased with the amount of interest we received on our inaugural transaction and look forward to becoming a regular issuer as we continue to build out our platform,” said Exeter CEO Mark Floyd in a prepared statement. “Our banking partners did an outstanding job taking the Exeter story to the market, as evidenced by the level of participation we had in the transaction.”
With a $300 million portfolio, Irving, Texas-based Exeter operates via a decentralized branch model. Branch personnel do the marketing, underwriting, and front-end contract verifications, and when they visit dealerships, they can make lending decisions. Funding and collections, though, are controlled centrally.
Good for them. Perhaps the company has been able to source credit other than sub-prime. Perhaps they found the MIT geeks that took all those junk mortgage loans, securitized them, waived their magic wand, and ended up with all AAA mortgages? Perhaps Blackstone provided a strong credit backup for the deal?
At any rate, there is a lot of the American public that have sub-prime credit but who, with good individual underwriting, can qualify for a reasonably priced, with decent collateral, auto loan. This is good for our economy if the underwriting was done well.
It will take two-three years to see how the portfolio performs. My guess is that they took the cream of their portfolio for this first securitization as well they should.