Alternative SME lender Kabbage has secured new funds to lend to its small business customers.
The company announced Wednesday (Mar. 8) that it priced $525 million of fixed-rate, asset-backed notes, with the facility expandable to $1.5 billion. Those notes will be issued by the firm’s new subsidiary, Kabbage Asset Securitization.
The firm added that the securitization was oversubscribed thanks to “top-tier institutional investors” showing interest. According to Kabbage, the asset-backed securitization is the largest ever for a small business lender.
“In a time when the FinTech industry has experienced challenges, our automated technology and data platform has demonstrated to investors Kabbage’s ability to deliver superior and predictable performance on small business loans as an asset class,” said Kabbage Head of Corporate Development Kevin Phillips in a statement. “Both the overwhelming investment interest and the anticipated strength of our bond rating are testaments to our proven approach to underwriting and managing small business loan performance through the Kabbage Platform.”
Phillips is referencing the news that the senior class of notes is expected to be rated as A(sf), an upgrade on the rating of its prior securitization, the company noted.
“Kabbage’s strong historical performance over the last three years played a key part in KBRA’s upgrade,” said KBRA Managing Director Anthony Nocera. “The upgrade is based on several structural improvements and the existence of more historical performance data relating to Kabbage’s collateral.”
Kabbage became the first alternative lender to issue asset-backed notes secured by small business loans in 2014. At that time, Guggenheim Securities provided the $270 million credit line and will again serve as sole structuring advisor and initial purchaser of these notes, reports said.