Didn't this end badly the last time?
AIG, Fortress Unit Test ABS With Personal-Loan Securitization | Fox Business
AIG, Fortress Unit Test ABS With Personal-Loan Securitization | Fox Business
The consumer-lending joint venture of private-equity firm Fortress Investment Group LLC (FIG) and insurer American International Group Inc. (AIG) is planning a rare securitization of subprime personal loans as early as this week, in the latest test of risk appetite for asset-backed bonds, where soaring demand has pushed yields to record lows.
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The 190,627 loans in the Springleaf deal have an average FICO credit score of 602, in line with many subprime auto ABS. But the average coupon of 25% on Springleaf's personal loans is above that on even "deep subprime" auto loans, probably because there is no collateral for 10% of the issue, an analyst said.
The "A" rated slice of the debt may yield near 2.5%, or 2 percentage points over an interest-rate benchmark, according to price talk circulated to investors. Similarly-rated but slightly longer-term debt within Santander's issue sold at a 1.775% yield.