Home equity fintech lender Point, in collaboration with its long-time financing partner Atalaya Capital Management, has successfully closed a $141 million rated asset-backed securities transaction.
The securitization was completed on May 15 and marked Point’s second rated securitization and third overall deal in the secondary market, with all securities receiving ratings from Morningstar DBRS.
Point originated all of the home equity investments (HEIs) involved in the securitization and will continue to service the assets. Notably, this transaction is the first HEI securitization in which higher-risk, BB-rated securities were sold, reflecting strong investor demand as the deal was oversubscribed.
“The past few months have seen incredible momentum developing in the HEI asset class,” Eddie Lim, co-founder and CEO of Point, said in a statement. “The investment community is seeing the results from HEIs exceed expectations and are embracing the product at scale. The overwhelming response to our latest securitization signals that there are more great things in store for Point, the homeowners we serve, and the HEI category as a whole.”
The growth of rated securitizations in the HEI space has accelerated since Morningstar DBRS published its ratings methodology for HEIs in July 2023. This has broadened the investor base to include insurance companies and money managers seeking new investment-grade securities.
Nomura Securities International was the sole structuring agent for the issuance. Nomura, Barclays Capital and Performance Trust Capital Partners were joint bookrunners on the transaction, and East West Markets and Cantor Fitzgerald & Co. were co-managers on the transaction.
In November 2023, Redwood Trust partnered with Point to close on a $139 million bond secured by 1,577 home equity investment contracts.