Oportun Funding plans an ABS of 400 million dollars
A pool of secured and unsecured personal installment loans to borrowers with limited credit histories secures a pool of asset-backed securities from Oportun 2022-1. The trust is expected to issue $400 million in notes to investors.
Oportun, Inc. and EPO II are the sponsors of the deal, which will issue the notes across three classes, although rating agency Kroll Bond does not provide ratings on the Class C notes.
The Trust will issue the Notes under a sequential payment structure, where the Class A Notes receive principal payments in full before the Subordinated Notes receive payment. Goldman Sachs is the leader.
Wilmington Trust, National Association will act as trustee and owner trustee in the transaction.
The KBRA plans to assign an “A” rating to the $348.6 million Class A notes and a “BBB” rating to the $30.3 million Class B notes. The notes benefit from reserve account, overcollateralisation, subordination and excess margin.
The deal is expected to close on March 31, according to DBRS | Morningstar, which plans to assign ratings ranging from “AA” on Class A ratings to “BBB” on Class C ratings.
Oportun uses a fintech-driven model to provide financing to borrowers who do not have established credit histories or are not serviced by mainstream and mainstream financial institutions.
Initially, the overcollateralization is 5.0% of the cut-off pool balance, an amount that will increase to 12.0% of the current pool balance, subject to a floor equal to 1.0% of the cut-off pool balance . A Funded Reserve Account at Closing will equal approximately 0.25% of the current balance of Notes outstanding. KBRA also noted that the reserve account is 0.24%, as a percentage of the initial collateral balance.
With regard to the excess spread, Oportun Funding 2022-1 remains at approximately 21.4%, based on a weighted average interest rate of 30.24%, less management fees of 5.0 %, and an assumed weighted average life-adjusted rating coupon of 3.8%.
A closer look at the collateral pool reveals assets with low balance loans granted to borrowers with modest credit ratings. Some 113,264 loans are in the pool, with an average balance of $3,717. On a weighted average (WA) basis, the pool has an interest rate of 30.2%, a VantageScore of 674, an initial term of 36 months and a seasoning of four months.
California, Texas and Florida are the three most represented states in the pool, with 46%, 28.3% and 9.3% respectively.
Oportun, Inc., is a wholly owned subsidiary of Oportun Financial Corp., a publicly traded consumer finance company. Since its inception, the company had issued more than 4.9 million loans with a principal balance of more than $12 billion and had $2.6 billion outstanding as of December.