Tricolor is more than just retailing vehicles in the Hispanic market nowadays.
Last week, Tricolor announced a $212 million social bond — what the company claims is the first ever in the United States collateralized by consumer auto asset backed securities (ABS) — to empower underserved, low-income communities and provide them with improved access to mainstream financing that ultimately allows them to build a better future.
According to a news release, J.P. Morgan Securities acted as the sole lead book-running manager.
Tricolor said this worthy achievement validates the application of capital markets investments to expand financial opportunities for low-income communities.
The company said the move also highlights a path for other purpose-driven enterprises using for-profit models to address social issues at scale.
Tricolor went on to say that the success of these installment contracts and the bond are rooted in Tricolor’s use of artificial intelligence to successfully underwrite and extend financing to credit invisible customers.
“We are excited to be the first in the U.S. to achieve a social bond designation across all auto consumer lending, enabling us to facilitate capital markets investment towards underserved Hispanic communities,” Tricolor founder and chief executive officer Daniel Chu said in the news release.
“This milestone issuance validates a path for capital markets investors to help accelerate our strategy to reverse systemic financial inequality in America, providing deserving people with access to reliable, affordable transportation and moving them into the financial mainstream, having been oversubscribed by an average of three times across all of the investment grade bonds,” Chu continued.
The Tricolor Social Bond is collateralized with paper designed to provide affordable access to vehicles for low-income consumers with no FICO score
Tricolor mentioned that it secured a second party opinion (SPO) from S&P Global Ratings to provide an opinion on the social benefits of this framework as well as the alignment to the International Capital Markets Association (ICMA) Social Bond Principles.
Tricolor said more than 59 million Hispanics in the United States would collectively rank as the eighth largest economy in the world. Yet, according to the FDIC National Survey of Unbanked and Underbanked Households, 32% of this US Hispanic population has no or limited access to mainstream credit.
George Wilkins from JPMorgan offered this perspective on Tricolor’s move.
“Congratulations to Tricolor for demonstrating an innovative new way to leverage social bonds,” Wilkins said in the news release. “This first for the Auto ABS market will help establish a new precedent for attracting support from capital markets investors for underserved populations.”
For more information about Tricolor, visit tricolorholdings.com and tricolor.com.
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May 03, 2022 at 10:03PM
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