NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2016-A (“AVNT 2016-A”). This is a $300 million consumer loan ABS transaction that is expected to close on February 25, 2016.
This transaction represents Avant, Inc.’s (“Avant” or the “Company”) first rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated under its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.
Founded in 2012, Avant is located in Chicago, Illinois and operates as an online personal loan lender. Personal installment loans are offered to non-prime consumers through the Avant Platform. As of January 2016, over $2.5 billion in loans have been originated through the Avant Platform in the U.S. The Company has retained approximately $1.5 billion and sold $1.0 billion to institutional investors. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.
The transaction has initial credit enhancement levels of 51.00% for the Class A Notes, 30.00% for the Class B Notes and 14.00% for the Class C Notes. Credit enhancement consists of overcollateralization, subordination and a reserve account funded at closing.
KBRA applied its General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and the Avant Platform’s historical gross loss data. KBRA also conducted an operational assessment of the Avant Platform, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
Preliminary Ratings Assigned: Avant Loans Funding Trust 2016-A
| Class | Preliminary Rating | Expected Initial Class Principal | ||||||
| A | A-(sf) | $172,414,000 | ||||||
| B | BBB-(sf) | $72,414,000 | ||||||
| C | BB(sf) | $55,172,000 | ||||||
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KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
