Oportun’s next ABS deal will include loans through MetaBank partnership

The upcoming consumer loan securitization for Oportun Inc. (Nasdaq: OPRT) is expected to include loans from a new lending partnership established with MetaBank, which has extended Oportun’s subprime loan program to bad debt borrowers. nationally restricted.

The $500 million Opportun Issuance Trust (OPTN) 2021-B will also likely be the first of its 17 securitizations to include a larger portion of loans partially secured by auto title loans.

According to pre-sale reports from rating agencies, Oportun will place $230.2 million in loans to borrowers with no credit history or FICO credit rating in a collateral pool guaranteeing the issuance of four categories of notes.

But the loan pool will grow to $511.5 million between its scheduled close on May 10 and the end of a three-month pre-funding period on July 31 — a period during which Oportun can make additional loan assignments to the pool at any time. from its managed loan portfolio which amounted to $1.9. billion, as of December 31, 2020.

Loans will need to meet minimum criteria, but could potentially reduce the identified pool’s credit metrics which includes a weighted average interest rate of 30.28% and average initial terms of 34 months with 10 months of run-in.

The agreement also has a three-year renewable period during which new assets can be added to the pool, including renewal loans for existing customers (renewal loans already represent more than 84% of loan balances in the original pool OPTN 2021-B).

Keypad with consumer loan key

Dmitry – stock.adobe.com

The deal’s transaction parameters also allow Oportun to include accounts created through its fledgling secured lending program. Last April, the company introduced a loan product that could be partially secured by auto title.

Although these secured loans are offered in California, the program is expected to expand to Florida, Texas, and potentially other states during the renewal period. Up to 10% of the collateral pool of OPTN 2021-B may be secured loans.

Loans from its partnership with nationally chartered MetaBank will also be part of the mix, according to pre-sale reports from Kroll Bond Rating Agency and DBRS Morningstar. This partnership is expected to launch in mid-2021 and expand Oportun’s lending programs outside of its current footprint of 12 states from which it issues loans through state licensing.

DBRS and KBRA differ on the notations of the notes in the agreement. KBRA has applied a preliminary A rating to the $340.15 million Class A bond tranche which DBRS has assigned an AA rating. Category B loans of $71.6 million are rated BBB by KBRA and A by DBRS; Only DBRS has assigned ratings to Class C subordinated notes (BBB) ​​and Class D bonds (BB high).

Oportun will use the proceeds of the notes to repay the balance of one of its 2018 securitization transactions and roll over existing loans into the new trust.

Kroll noted an expected net loss range of 8.8% to 10.%, lower than Oportun’s first trade of 2021 (which was 9.5% to 11.5%).

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