ThunderRoad Financial completed its fourth whole loan sale to date, this time of 5,000 accounts, Powersports Finance has learned.
This is the powersports lender’s second-largest transaction to date, at $55 million, after its $60 million asset-backed securitization in April 2016, President and Chief Executive Donal Hummer Jr. said.
The backer of the purchase is a California-based alternative investment manager that’s valued at $13 billion and focuses special situation investing.
ThunderRoad Financial has strategically delayed the issuance of its second securitization, which was initially planned for the first half of this year. Instead, the lender is focusing on other avenues of capital growth, such as whole loan sales, which is a market that is heating up and is “less fickle” than securitizations, Hummer told Powersports Finance in August.
The company’s first ABS transaction — ThunderRoad Motorcycle Trust 2016-1 — was backed by prime and subprime motorcycle retail installment loans, according to a presale report from Morningstar Credit Ratings. With that issuance, ThunderRoad Financial became the second powersports lender to enter the ABS market after Harley-Davidson Financial Services.
In the secondary market, one of the easier and less expensive transactions are whole loan sales, Hummer said.
“In relation to a securitization, it’s a pretty simplified loan sale transaction, and you can afford to break those down into smaller numbers,” he said. “You can do a $5 million, $10 million, or $100 million transaction, whereas with a securitization, you really should be looking at something on the order of $50 million or more — in reality $100 million or more, which makes it a lot more cost effective.”
In its infancy, ThunderRoad Financial issued whole loan sales, typically in the range of $5 million, Hummer said. “There seems to be a lot of interest in [whole loan sales] right now,” Hummer said. “The capital markets are fickle … but you just have to be adaptable to the changing environment.”
Reno, Nev.-based ThunderRoad Financial makes loans for 450 dealers in 30 states, and is partnered with Royal Enfield North America.
Hummer will sit down for a fireside chat at PowerSports Finance 2017. Other sessions include: Credit Trends in Powersports Finance, Finding Loan Growth Amid Increasing Competition, F&I Dos and Don’ts, Keys to Successful Subprime Lending, and Regulatory Compliance Update.