Octane Lending is sponsoring another round of asset-backed securities (ABS) funding, in a $300 million transaction called Octane Receivables Trust, 2022-2, secured by direct consumer loans and indirect retail installment contracts on power sports and outdoor power equipment.
The installment loans are collateralized by $317 million in fixed-rate installment loans to prime and non-prime borrowers. Octane is coming off of a period of some operating issues. It generated an approximate $22 million net loss for the five months ended May 31, according to a pre-sale report from Kroll Bond Rating Agency.
ABS and warehouse financing costs increased in the same five-month period for Octane. Also, to date in 2022, Octane hasn't sold any securitization residuals and therefore has not recognized any gains on the sale of such assets, unlike 2021. Just as other operational issues impacted Octane Lending. Specifically, supply chain constraints and inventory levels reduced fees from original equipment manufacturers (OEM).
The transaction, known as OCTL 2022-2, has an average current loan balance of $12,954, compared with $12,663, and a concentration of loans in Octane's prime Risk Tiers of 66.8%, similar to the previous deal.
On a weighted average (WA) basis, OCTL 2022-2 has an APR of 12.4%, a FICO score of 698, and a loan-to-value ratio of 116.9%. The current transaction also has a higher concentration of used vehicles, 32%, compared with the previous ratio of 31%.
OCTL 2022-2 will pay note holders on a sequential basis through four classes of notes. KBRA expects to assign ratings of 'AAA' on the $226.4 million, class A notes; 'AA' on the $27.8 million, class B; 'A' on the $18 million, class C and 'BBB' on the $27.5 million class D notes.
The transaction benefits from subordination, a cash reserve account equaling 1.0% of the initial pool balance, and initial overcollateralization of 5.3%, building to a target of 6.4% of the initial pool balance. Excess spread is also built into the deal, at about 4.1%.
Octane Lending is sponsoring another round of asset-backed securities (ABS) funding, in a $300 million transaction called Octane Receivables Trust, 2022-2, secured by direct consumer loans and indirect retail installment contracts on power sports and outdoor power equipment.
The installment loans are collateralized by $317 million in fixed-rate installment loans to prime and non-prime borrowers. Octane is coming off of a period of some operating issues. It generated an approximate $22 million net loss for the five months ended May 31, according to a pre-sale report from Kroll Bond Rating Agency.
ABS and warehouse financing costs increased in the same five-month period for Octane. Also, to date in 2022, Octane hasn't sold any securitization residuals and therefore has not recognized any gains on the sale of such assets, unlike 2021. Just as other operational issues impacted Octane Lending. Specifically, supply chain constraints and inventory levels reduced fees from original equipment manufacturers (OEM).
The transaction, known as OCTL 2022-2, has an average current loan balance of $12,954, compared with $12,663, and a concentration of loans in Octane's prime Risk Tiers of 66.8%, similar to the previous deal.
On a weighted average (WA) basis, OCTL 2022-2 has an APR of 12.4%, a FICO score of 698, and a loan-to-value ratio of 116.9%. The current transaction also has a higher concentration of used vehicles, 32%, compared with the previous ratio of 31%.
OCTL 2022-2 will pay note holders on a sequential basis through four classes of notes. KBRA expects to assign ratings of 'AAA' on the $226.4 million, class A notes; 'AA' on the $27.8 million, class B; 'A' on the $18 million, class C and 'BBB' on the $27.5 million class D notes.
The transaction benefits from subordination, a cash reserve account equaling 1.0% of the initial pool balance, and initial overcollateralization of 5.3%, building to a target of 6.4% of the initial pool balance. Excess spread is also built into the deal, at about 4.1%.
