NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Upstart Securitization Trust 2019-1 (“UPST 2019-1”). This is a $231.91 million consumer loan ABS transaction that is expected to close on February 22, 2019.
This transaction is Upstart Network, Inc.’s (“Upstart” or the “Company”) fifth securitization of prime and near prime unsecured consumer loans overall and its first in 2019. 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 Program” or the “Program”). Upstart is a wholly-owned subsidiary of Upstart Holdings, Inc.
Upstart was founded in February 2012 and the first unsecured consumer installment loan was issued in May 2014. As of February 4, 2019, the Upstart Program has issued over 239,000 loans for over $3.0 billion with October 2018 originations of $164 million being the highest historical monthly originations. Upstart’s Program uses a hybrid funding model to finance the loans originated by the Program. Upstart places loans originated through the Program using a random allocation process whereby approximately 65% to 75% of loans are sold to institutional investors, approximately 15% to 25% retained by Upstart, approximately 2% sold to fractional retail investors and approximately 5% to 15% are retained by CRB.
The transaction has initial credit enhancement levels of 66.80%, 41.78%, 24.28% and 10.50% for the Class A, Class B, Class C and Class D notes, respectively. The reserve account will be funded at closing in the amount of 0.50% of the of the cutoff loan balance. The transaction includes a cumulative net loss amortization trigger, which if breached, will cause the transaction to enter a full turbo amortization while the trigger is in breach.
KBRA applied its Global 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 Program, 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.
To access ratings, reports and disclosures, click here.
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Preliminary Ratings Assigned: Upstart Securitization Trust 2019-1 |
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| Class | Preliminary Rating |
Expected Initial |
||
| A | A- (sf) | 86,837,000 | ||
| B | BBB- (sf) | 64,472,000 | ||
| C | BB- (sf) | 45,093,000 | ||
| D | B- (sf) | 35,508,000 | ||
Related Publications: (available at www.kbra.com)
- Global Consumer Loan ABS Rating Methodology
- Upstart Securitization Trust 2019-1 Pre-Sale Report
- Upstart Securitization Trust 2019-1 Peer Comparison
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
