NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Upstart Securitization Trust 2017-1 (“UPST 2017-1”). This is a $163.107 million consumer loan ABS transaction that is expected to close on June 21, 2017.
This transaction is Upstart Network, Inc.’s (“Upstart” or the “Company”) first securitization of prime and near prime unsecured consumer loans. The loans are facilitated by Upstart’s proprietary models supporting an online marketplace that connects borrowers and investors by offering consumer loans originated by Cross River Bank (“CRB”) through the platform, www.upstart.com (the “Upstart Platform” or the “Platform”). Upstart is a wholly-owned subsidiary of Upstart Holdings, Inc.
Upstart was founded in February 2012 and since the first unsecured consumer installment loan was issued in May 2014, has issued over 53,000 loans for over $650 million. Upstart places loans originated through the Platform using a random allocation process whereby approximately 55%-65% of the loans are sold to institutional investors, 15%-25% retained by Upstart Loan Trust, 5%-10% sold to fractional retail investors and up to 10% retained by CRB.
The transaction has initial credit enhancement levels of 44.35%, 30.20% and 15.55% for the Class A, Class B and Class C notes, respectively. Credit enhancement is comprised of overcollateralization, subordination of the junior note classes, a cash reserve account and excess spread.
KBRA applied its U.S. Consumer Loan ABS Rating Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Upstart’s historical gross loss data. KBRA also conducted an operational assessment of the Upstart 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.
For complete details on the analysis, please see KBRA’s Pre-Sale Report, Upstart Securitization Trust 2017-1 Pre-Sale Report, which was published today at www.kbra.com.
Preliminary Ratings Assigned: Upstart Securitization Trust 2017-1
| Class | Preliminary Rating | Expected Initial Class Principal | ||||||||
| A | A- (sf) | $107,810,000 | ||||||||
| B | BBB- (sf) | $27,169,000 | ||||||||
| C | BB- (sf) | $28,128,000 |
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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).
