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.