Zip Co master trust up and running with $400m deal
Buy now, pay later payments provider Zip Co has won over equity investors in recent months, and has now set its sights on credit funds. Zip is understood to be in front of credit funds seeking to raise $400 million via the sale of asset backed securities, which would be the first issue for its recently established Master Trust securitisation program. The issue is split into seven classes starting with $208 million likely to be rated A1 by Moody’s, and ending with two tranches of $20 million that are not rated.
In between, there’s debt rated A1, Baa2, Ba2 and B2. It’s all slated to mature in August 2021, according to terms in front of potential buyers.
Investors were told to compare the proposed Zip offer to Latitude Financial Group’s two trusts – a New Zealand credit card trust and an Australian version – as well as UK deals from Lloyds (Penarth), Delamare Cards and NewDay Ltd.
Key numbers in front of potential investors include Zip’s 60 to 180 day delinquency rate (1.9 per cent), charge-off rate (1.6 per cent) and monthly payment rate (13.6 per cent). “It is anticipated the program will provide the necessary scale to support Zip’s rapid growth, while delivering a cost effective source of funds over the short to medium term,” Zip founder and chief operations officer Peter Gray said in a statement to Street Talk on Monday. NAB launched the deal on Monday. Zip is also spending plenty of time explaining its business – the same way it has been pitching its fund to equity investors and helped drive a 200 per cent plus share price uplift this year.
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