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Investment manager Angel Oak Capital Advisors has completed its first securitization backed by home equity lines of credit (HELOCs) amid strong demand from investors.
“We remain solidly bullish on U.S. housing overall, relative to other areas of credit and the broader fixed-income landscape,” Sreeni Prabhu, co-CEO and managing partner at Angel Oak, said a statement.
The $191 million securitization consists of HELOCs originated through Angel Oak’s lending business and third-party channels. Loans in the portfolio carry a weighted average coupon rate of 10.9%.
In terms of credit quality, the loans have an average FICO score of 746 and a combined loan-to-value ratio of 63%.
Consumer interest in home equity products is growing. A recent survey from mortgage vendor MeridianLink found that nearly 30% of U.S. homeowners would consider tapping into their equity home equity due to ongoing economic volatility and uncertainty.
The HELOC securitization was rated by Kroll Bond Rating Agency and was six times oversubscribed at the AAA-rated tranche, according to Angel Oak.
Angel Oak plans to issue additional HELOC securitizations alongside its traditional nonqualified mortgage (non-QM) deals. Since 2015, the company has completed more than 60 transactions involving 50,000-plus nonagency loans with an aggregate value of $22 billion. So far this year, the company has completed six securitizations, including the HELOC transaction.
On Wednesday, the company announced that its subsidiary Angel Oak Mortgage REIT issued $40 million in senior notes due in 2030, carrying a 9.75% interest rate. Investors have the option to purchase up to an additional $6 million in notes.
Angel Oak will use the net proceeds for general corporate purposes, including the acquisition of non-QM loans and other target assets originated by its mortgage lending platform or acquired in the secondary market.
