Oportun, Inc., a listed consumer finance company based in Menlo Park, Calif., Sponsors the 18e an asset-backed securitization transaction (ABS) secured by fixed rate consumer installment loans.
Most of the deals were backed by unsecured loans, and now the Opportunity Issuance Trust 2021-C is one of the first deals on the platform to be backed by secured personal loans (SPLs), according to the agency. Kroll Bond rating.
As of the statistical calculation date, auto-backed personal loans made up about 1.72% of OPTN 2021-C’s collateral pool, KBRA said.
SPLs cannot exceed 10% depending on established transaction concentration limits. The rating agency noted that SPL products may have a lower default rate and a higher recovery rate than their unsecured counterparts. For this transaction, however, KBRA maintained the same default and collection assumptions as the comparable unsecured product from Opportunity.
Currently, SPL products are only offered in California, Florida and Texas, KBRA noted.
OPTN 2021-C will raise $ 500 million via four tranches of notes. KBRA plans to assign an “A” rating to the Class A Notes and “BBB” to the Class B Notes. The Notes benefit from a credit enhancement in the form of over-collateralization, subordination, reserve account and excess margin. In addition, the transaction has initial credit enhancement levels of 26.5% for Class A tickets and 14.9% for Class B tickets.
Pool loans have balances ranging from $ 300 to $ 12,300. In addition, they have an initial term ranging from seven to 54 months and an annual percentage rate cap of 36%, KBRA said.
Oportun operates through state licenses and offers its loan products to low and moderate income consumers with little or no credit history. On average, the amount of original loans to new customers is $ 2,442 and $ 5,235 for renewed customers. The average client of the company has an annual gross income of about $ 50,000, and about 50% of new Opportunity clients do not have a FICO score.
In August 2021, Oportun began offering loans through its partnership with MetaBank, National Association.
The deal also has a three-year renewable period that allows the transaction to fund further collateral, as long as the collateral meets eligibility criteria and concentration limits, KBRA said. Principal payments will not be made during the renewal period until the coverage tests are satisfied. Among other requirements, the trust must maintain the required amount of overcollateralisation.
The agreement includes provisions for an early amortization event. The trust has certain triggers which, when triggered, will end the rotation period and start repaying the notes.