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November 08, 2019  

Large Legal-Settlement Deal In the Works

Structured-settlement investor Sutton Park Capital is preparing the biggest-ever securitization in the asset class.

The $700 million transaction is expected to hit the market in the first quarter at the earliest, according founder Josh Wander. As with Sutton Park’s previous deals, the bonds would be backed by cashflows from legal settlements, with perhaps a smattering of lottery settlements in the mix.

Over the years, J.G. Wentworth has been by far the most active issuer of bonds backed by structured settlements. But the biggest deal to date was a $308.1 million offering that law firm Brown Rudnick issued in 2001.

Sources said Sutton Park’s planned offering was supposed to hit the market in early November, but was delayed for unknown reasons. The Boca Raton, Fla., firm last was in the market in February 2017, when it sold $220.8 million of bonds via underwriter Natixis.

In a typical structured settlement, a judge might award a plaintiff in a personal-injury case millions of dollars but give the defendant years to pay it off. In many cases, plaintiffs are eager to sell the receivable to an investor in exchange for a discounted lump-sum payment. The same is true of lottery winners who elect to receive their payouts over 20 years.

Since the first structured-settlement securitization was issued in 1997, the asset class has generated $9.3 billion of asset-backed securities, according to Asset-Backed Alert’s ABS Database.