Angel Oak Wraps Up Industry’s First ‘Social Bond’ MBS


Angel Oak Capital Advisors LLC says it has completed AOMT 2021-2, the first non-agency mortgage-backed securitization issued in the U.S. that qualifies as a “social bond.”

The $231 million securitization is composed primarily of non-qualified mortgages (non-QM) originated by affiliated mortgage lenders. The securitization, made up of 466 loans, has an average credit score of 740 and a loan-to-value ratio of 73%. The transaction was rated by Fitch Ratings and Kroll Bond Rating Agency, and the senior tranche received a AAA rating.

Angel Oak says it adhered to standards put in place by the International Capital Market Association (ICMA) Social Bond Principles, a framework for social- and green-bond issuances. Angel Oak also secured a second-party opinion from ISS ESG, which confirmed AOMT 2021-2 alignment with the standards set forth by the ICMA Social Bond Principles.

In addition, Angel Oak says it developed a framework and used data analytics to categorize and quantify the bonds’ social impact at the loan level. The securitization pooled loans that generally offer mortgage financing solutions for underserved U.S. home buyers who are not able to borrow through traditional lending channels. These borrowers largely include self-employed individuals – a sector of the population that has disproportionately felt the economic strain caused by the COVID-19 pandemic.

“The issuance of this securitization comes as a natural next step as part of our company-wide, socially conscious integration program,” says Rob McDonough, director of ESG and regulatory initiatives at Angel Oak. “This focus has allowed us to not only pioneer a social bond, but also institute the due diligence necessary to ensure an impactful product.”

The completion of AOMT 2021-2 marks the firm’s second securitization this year, totaling approximately $500 million in issuance in 2021. Since Angel Oak’s first securitization in 2015, the firm has completed 23 securitizations totaling more than $7.9 billion.

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