News Column

Standard and Poor's Reaffirms Ratings on Two of Newtek Small Business Loan Trusts Under Stricter Rating Methodology

June 28, 2014

By a News Reporter-Staff News Editor at Investment Weekly News -- Newtek Business Services, Inc. NASDAQ: NEWT, The Small Business Authority(), announced that Standard & Poor's Ratings Services ("S&P") recently reaffirmed its 'AA' rating on the class A notes from Newtek Small Business Loan Trust 2010-1, and its 'A' rating on class A notes from Newtek Small Business Loan Trust 2013-1. The reaffirmation of these ratings is the result of the Company's disciplined underwriting, and established expertise in the areas of small business loan origination, financing and loan servicing. S&P recently tightened its rating criteria through revisions in its methodology and assumptions for rating U.S. Small Business loan-backed securitizations.

Barry Sloane, Newtek President, Chairman and Chief Executive Officer commented, "We are extremely pleased that S&P has reaffirmed the 'AA' and 'A' ratings on our 2010-1 and 2013-1 securitizations, respectively, which were issued by our lending subsidiary, Newtek Small Business Finance. This is quite a notable achievement, particularly in light of the more stringent criteria utilized by S&P to rate these securitizations, coupled with the fact that these securitizations contain a significant amount of seasoned loan originations and have continued to perform. In fact, while our securitizations have received solid reaffirmations, many brand-recognized institutions have received mixed ratings, which included several downgrades, as a result of S&P's stricter guidelines."

Mr. Sloane continued, "The reason we have been able to maintain these ratings even with stricter guidelines, stems from our decade-long experience and expertise with the originating, underwriting and servicing of small business loans coupled with our proven business model. At Newtek, we deal directly with our clients boarding them through our proprietary web-based referral technology, NewTracker(). In 2014, we expect to receive approximately $6.0 billion in lending referrals through our NewTracker() system, from which we expect to fund $250 million in loan originations, which represents a more than 40% increase over 2013. Having access to such a large amount of referrals enables us to remain extremely meticulous in choosing what loans we will originate, while maintaining our stringent underwriting guidelines and credit quality standards. As a result, we accept only approximately two percent of the referrals we receive, which is integral to our success, allowing us to fund the loans with the best characteristics, ensuring future solid performance."

Newtek Small Business Loan Trust 2010-1 and 2013-1 are both asset-backed securities transactions collateralized primarily by a pool of unguaranteed portions of U.S. Small Business Administration Section 7(a) loans backed by commercial real estate and other collateral, such as equipment and receivables from various sources. Since December of 2010, Newtek Small Business Finance has completed four asset-backed securities transactions. Guggenheim Securities acted as the placement agent for all four securitizations.

Keywords for this news article include: Banking and Finance, Newtek Business Services Inc.

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Source: Investment Weekly News

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