ThunderRoad: Securitization Process ‘Makes Better Business’

canstockphoto8352044 (1)After issuing its first-ever asset-backed securitization in April, ThunderRoad Financial will look to issue a larger transaction next time, said Donal Hummer Jr., the lender’s president and chief executive.

The costs of an asset-backed securitization are the same regardless of issuance size, Hummer said yesterday during a First Associates Loan Servicing webinar entitled Securitization: A Case Study.

“If you can do a bigger securitization, you will reduce your transaction greatly,” he said. “We are hoping — in our next transaction — to do one larger than the previous securitization, for that reason.”

Donal Hummer for ThunderRoad

Donal Hummer Jr., President and Chief Executive, ThunderRoad Financial

The powersports lender’s debut deal, ThunderRoad Motorcycle Trust 2016-1, was a $59.7 million private placement transaction under Rule 144A. The trust was backed by prime and subprime motorcycle retail installment loans, according to a Morningstar presale report.

The securitization enabled ThunderRoad to repay $60 million on its credit lines and “freed up a lot of cash for us to redeploy and prudently grow our business,” Hummer said. Being able to issue a rated securitization “was a huge benefit” as well, because rated ABS can increase a company’s investor pool, he said.

“Many financial companies will not look to invest in an unrated securitization,” he said. “It enabled us to get better terms in some of our current warehouse lines.”

The Reno, Nev.-based lender’s portfolio has increased 279% to 5,717 loans as of January, up from 1,510 loans at the same time a year prior, according to a Morningstar report. ThunderRoad makes loans for more than 300 dealers in 30 states, and adds an average of one to two dealers to its network daily, according to Hummer. Approximately 20% of its overall portfolio is comprised of subprime or near-prime consumers.

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