NewtekOne, Inc. Closes ALP Loan Securitization with Sale of $184 Million of Rated Notes

Core Viewpoint - NewtekOne, Inc. has successfully closed a $184 million securitization backed by $216 million of Alternative Loan Program (ALP) loans, marking its 16th rated securitization and the third secured by ALP loans [1][2]. Securitization Details - The securitization involved the sale of $155.93 million in Class A Notes, $23.82 million in Class B Notes, and $4.33 million in Class C Notes, collectively backed by $216.56 million of collateral [2]. - The securitization was oversubscribed by two times, indicating strong investor interest [2]. Loan Underwriting and Structure - The company underwrites ALP loans based on the premise that the underlying businesses are the main sources of loan repayments, requiring personal guarantees from equity owners and pledging business assets as collateral [3]. - ALP loans support borrowing needs up to $15 million, providing flexibility compared to government programs and conventional bank loans, with lower monthly payments due to full amortization over 10-25 years [4]. Financial Performance and Projections - The gross weighted-average coupon of the collateral pool is expected to be approximately 13.30%, with a net weighted-average coupon of about 12.30% after servicing fees [4][5]. - The Class A Notes received a rating of "A (low) (sf)" with a yield of 6.338%, while Class B and C Notes received ratings of "BBB (sf)" and "BB (sf)" with yields of 7.838% and 10.338%, respectively [5]. - The company has originated approximately $480 million in ALP loans since 2019, with around $400 million currently outstanding, and projects to originate 2,700 loan units in 2025 [6]. Market Position and Strategy - NewtekOne aims to continue issuing securitizations backed by ALP loans, leveraging its existing infrastructure and expertise to enhance financial performance [4]. - The company has built a loyal investor base for ALP-backed securitization notes, including major money managers and financial institutions [6]. - The transition to a financial holding company and ownership of a nationally chartered bank has diversified funding sources and reduced financing costs [6].