KBRA assigns preliminary ratings to Oportun Issuance Trust 2021-C

ByDavid M. Conte

Oct 15, 2021

NEW YORK–(COMMERCIAL THREAD) – Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Oportun Issuance Trust 2021-C (“OPTN 2021-C”), a $ 500 million consumer loan ABS transaction with KBRA rating Class A and Class B Notes totaling $ 436.266 million. The transaction includes a renewable three-year period during which additional guaranteed and unsecured consumer installment guarantees can be acquired in the securitization trust as long as they meet certain concentration limits and eligibility criteria. The preliminary ratings reflect an initial credit enhancement of 26.53% and 14.95% on the Class A and Class B Notes, respectively. Credit enhancement consists of over-collateralization, subordination, excess margin and a cash reserve.

OPTN 2021-C represents the eighteenth ABS securitization secured by secured and unsecured consumer installment loans issued by Oportun, Inc., a wholly-owned subsidiary of Oportun Financial Corporation (“Oportun” or the “Company” ), a publicly traded company based in California. NASDAQ-listed consumer credit company. The Company provides financial services, including unsecured and secured personal installment loans to borrowers who do not have a credit rating or who may have a limited credit history. Oportun has been issuing unsecured consumer loans for 15 years and, in April 2020, began offering secured personal installment loans (“SPL”) that are at least partially secured by an automobile title.

As of the statistical calculation date, loan amounts range from $ 300 to $ 12,000, have an original term of seven to 54 months, and have an annual percentage rate cap of 36%. The average original loan amount to new customers is $ 2,442 and the average original loan amount to renewed customers is $ 5,235. Loans typically require bi-monthly or bi-monthly (or monthly as required by law) payments, which is when a client receives their paycheck. About 50% of new Opportunity customers do not have a FICO score.

KBRA analyzed the transaction using the Global Consumer Loan ABS Rating Methodology as well as its Global Structured Finance Counterparty Methodology and Global ESG Rating Methodology as part of its data analysis of the portfolio portfolio, underlying collateral pool and capital structure. KBRA has reviewed its operational reviews of Opportunity, as well as periodic due diligence calls with the Company. Operational agreements and legal opinions will be reviewed prior to closing.

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Disclosures

Further information on key credit considerations, sensitivity analyzes that examine the factors that may affect these credit ratings and how they might lead to an upgrade or downgrade, and ESG factors (when they are a key factor in changing the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially significant sources that were used to prepare the credit rating and information about the method (s) (including significant models and sensitivity analyzes of the relevant key rating assumptions, if any) used to determine the credit rating are available in the information disclosure form (s) located here.

Information about the meaning of each rating category can be located here.

Further information relating to this rating measure is available in the information disclosure form (s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures can be found at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the United States Securities and Exchange Commission as NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a credit rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a credit rating agency with the UK Financial Conduct Authority under the temporary registration regime. In addition, KBRA is appointed as the designated rating agency by the Ontario Securities Commission for issuers of asset-backed securities to file a simplified prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.