Cherry Securitization Trust, series 2025-1 is preparing to issue $300 million in asset-backed securities (ABS), secured by a pool of unsecured consumer loans, and retail installment contracts to finance elective medical procedures.
The dental and medical spa industries accounted for 60.1% and 26.0% of the deal's balance, in a pool composed entirely of elective medical receivables, respectively. Cross River Bank, Lead Bank, Cherry Technologies and Cherry Retail Installment originated the loans in the pool, and since the loans finance procedures are elective and not covered by insurance, the financings largely go to prime borrowers.
KBRA noted that compared with the CHRY 2024-1 deal, Cross River Bank is not currently originating new receivables, although it could resume doing so down the line.
Within the dental and medical spa industries, Cherry makes loans through its partners in dermatology, optometry, and plastic surgery. Cherry Technologies is the servicer on the deal, according to Kroll Bond Rating Agency.
By the transaction's March 31 statistical cutoff date, borrowers in the collateral pool had an average original balance of $2,356, with a weighted average (WA) interest rate of 12.43%, and a WA Vantage score of 716.
Some 154,404 loans are in the collateral pool, KBRA said, and they have a WA remaining term of 23 months, he rating agency said.
The transaction will issue notes through four tranches, and they all have a Nov. 15, 2032 legal final maturity date, according to KBRA. The notes benefit from credit enhancement levels of 23.37%, 16.57%, 11.62% and 3.62% respectively, KBRA said.
As for the deal's structure, CHRY 2025-1 will repay noteholders sequentially. The deal also benefits from overcollateralization, initially 2.65%, During the 24-month revolving period, target overcollateralization would increase to 4.65%, KBRA said.
As for geographic diversification, Florida, California and Texas account for 15.9%, 15.13% and 13.20% of the pool, respectively.
The rating agency assigned A, BBB, BB and B to classes A, B, C and D, respectively.
