Online lender Avant is poised to pay investors hearty yields of up to 10% to clear its first rated securtization of personal loans to middle-class borrowers. Avant hired Kroll Bond Rating Agency to rate its three-tranche US $300m bond, with the hope of attracting a wider audience to its budding securitisation program.
But anxious investors, who have been seeking big concessions as risk assets have stumbled, demanded double-digit compensation on the Chicago-based company's junk-rated notes.
"If it's not a flight-to-quality Tier 1 retail auto trade, it requires a lot more price discovery," one source told IFR, noting the "difficult environment" at the moment.
Avant's US $55m block of 2.66-year double-B notes were being talked at a 10% yield on Friday, higher than the 9.6% seen this week on the Bank of America Merrill Lynch high-yield index.
When Avant last came to market with an unrated bond deal of its loans in November, its equivalent unrated C class cleared at 8.75%.