The senior tranche of Affirm’s latest Peloton-backed deal, most protected from the default of the underlying borrowers, offers a coupon of just over 1 per cent, only around 0.2 percentage points more than an equivalent US government bond at the time the deal was priced in April. The deals highlight some of the financial wizardry that has helped fuel the buy-now-pay-later boom during the pandemic-driven surge in online shopping, while the low yields suggest investors are keen for exposure to some of the highest-rated individual borrowers in the US.
