TORRANCE, Calif.–Unify Financial Credit Union is marketing a $300-million bond offering in the asset-backed securities market.
The $3.36-billion Unify Financial is securitizing the offering with a portfolio of select, long-term prime auto loan originations, according to S&P Global Ratings.
Although such transactions remain rare, NCUA granted credit unions the authority to offer the auto-loan securitizations in 2017 as a potential source of funding.
The transaction represents only the second auto-loan securitization sponsored by a federal credit union since 2017, when the National Credit Union Administration gave the green light for federal credit unions to pursue securitization as a funding source for loans.
According to the listing with S& Global, the expected closing date is March 24.
“The preliminary ratings assigned to UNIFY Auto Receivables Trust 2021-1's (UART 2021-1's) asset-backed notes reflect our view of the availability of approximately15.5%, 12.7%, 10.3% and 6.4% credit support (including excess spread) for the class A, B, C and D notes, respectively, based on our stressed cash flow scenarios,” S&P Global said. “These credit support levels provide coverage of approximately 5.18x, 4.24x, 3.42x, and 2.12x the high end of our 2.75%-3.00% expected cumulative net loss (CNL) range for the class A, B, C, and D notes, respectively…Our expectation that under a moderate ('BBB') stress scenario (2.0x our expected loss level), all else being equal, our preliminary ratings of 'A-1+ (sf)'/'AAA (sf)', 'AA (sf)', 'A+ (sf)', and 'BBB (sf)' ratings on the class A, B, C, and D notes, respectively, are consistent with the credit stability limits specified by section A.4 of the Appendix contained in ‘S&P Global Ratings Definitions,’ published Jan. 5, 2021.”
The S&P Global report can be found here.
Unify Financial reported net income of $12.8 million at year-end 2020, with a net worth ratio of 8.53.%. The credit union has 260,000 members.