Eikon: Wendy’s and Massage Envy Land Whole Biz ABS

June 13, 2019
Original article by David Bell

Recent pricing on wholesale ABS deals for chains Wendy’s and Massage Envy illustrate differences on deals in this area of the market, reports Eikon.

While Wendy’s priced at a yield of 3.8% for the 7-year tranche and 4.10% for the 9.7-year tranche, rated BBB, Massage Envy’s 5-year tranche priced at 6.5%, rated BBB.

“If there’s any space in securitization that has defined tiering, it’s in whole business ABS,” said Senior Portfolio Manager Jake Remley of the securitized/government team at Income Research + Management.

“We like Wendy’s; though it is not quite as strong a growth story as Dunkin’, it has weathered a number of economic cycles and we are comfortable that the corporate governance is strong,” he said.

“Those businesses (Wendy’s and Dunkin’) can prove that revenue will hold up through a cycle. I don’t know if you can say that about massage parlors,” Remley added.