The consumer lender Springleaf Financial on Wednesday priced $242.7 million of subprime residential mortgage-backed securities at a yield of 4%, as expected, according to an investor.
The Springleaf bond is one of several that issuers — including Springleaf under its previous name, American General Finance — have cobbled together with older delinquent and performing loans since 2008. Other issuers have been struggling to create private mortgage bonds backed by new loans, which would be crucial to expanding credit for U.S. housing.
The senior bonds garnered a AAA rating from Standard & Poor's after Springleaf structured the deal with 51.15% in credit enhancement, according to the term sheet.
That level is almost seven times the enhancement required by another rating firm for a Redwood Trust bond backed by new, high-quality loans earlier this year.
Springleaf is 80%-owned by Fortress Investment Group and in May set plans to raise equity for a real estate investment trust that would invest in subprime mortgages.
Fortress acquired its stake last year from American International Group Inc.
