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Newtek Issues S&P-Rated Small Business Loan Securitization

November 16, 2016, 07:12 AM
Filed Under: Industry News

Newtek Business Services Corp., an internally managed business development company, announced that it has completed its seventh and largest small business loan securitization.  The securitization resulted in the issuance and sale of $43,632,000 of Class A Notes and $9,812,000 Class B Notes, rated “A” and “BBB+”, respectively, by Standard and Poor’s Financial Services LLC (the "Notes").

The Notes are collateralized by the right to receive payments and other recoveries attributable to the unguaranteed portions of SBA 7(a) Loans made by Newtek Small Business Finance, LLC ("NSBF") pursuant to Section 7(a) of the Small Business Act, and overcollateralized by NSBF's participation interest in the unguaranteed portions.  Deutsche Bank Securities Inc. acted as sole book-running manager and Capital One Securities, Inc. acted as co-manager for the sale of the Notes and placed the Notes with five institutional investors, two of whom were new to Newtek's securitization  program.  The Notes were priced and sold to investors at an average initial yield of 3.77% (Note Interest Rate will be floating rate) across both classes and had a 76.25% advance rate for both classes of S&P-rated Notes.

Barry Sloane, Chairman, President and Chief Executive Officer of Newtek Business Services Corp. said, "We are excited to have worked with Deutsche Bank and Capital One on our seventh and largest small business loan securitization to date.  This is the first time we issued a securitization with two classes of S&P rated Notes.  Moreover, in this securitization we received the highest advance rate of all our securitizations to date of 76.25% of the face value for the underlying collateral.  Our yield to investors, across both classes of Notes, of 3.77% for non-recourse term-financed match-funded floating-rate debt is significantly below our cost of funding for a baby bond issuance or other debt financing, and we are able to retain the unguaranteed portions of these SBA 7(a) Loans on our balance sheet.  We look forward to additional securitization transactions in 2017 and are excited about our approach to financing our nationwide loan business.”

Newtek Business Services Corp. is an internally managed BDC, which along with its controlled portfolio companies, provides a wide range of business services and financial products under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, Newtek has provided state-of-the-art, cost-efficient products and services and efficient business strategies to over 100,000 SMB accounts across all 50 states to help them grow their sales, control their expenses and reduce their risk.

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