OneMain Finance is preparing to sponsor a $460.5 million asset-backed securities deal through the OneMain Financial Issuance Trust, even as recent securitizations experience performance issues.
Thirty-day plus delinquencies in the trust were 5.9% in September, compared with 6.0% the previous month, a negligible change considering that late payments are still near their highest levels since 2017, according to a pre-sale report from the Kroll Bond Rating Agency.
More recent OMFIT securitizations have experienced increasing 30+ delinquencies as well as annualized net loss rates, Kroll said. OMFIT 2022-3 is the third term securitization from the OMFIT program this year and will issue bonds secured by about 62,863 loans.
And then there are corporate changes. The company's chief risk officer exited the company last month.
Still, the notes are expected to receive mostly high credit ratings, likely due to subordination in the capital structure, and several forms of credit enhancement. For one, the notes benefit from initial overcollateralization of 10.25% of the initial pool balance, a level that the transaction will maintain through its entire run.
OMFIT also benefits from a cash reserve account, excess spread and trigger events. The cash account is funded at closing, initially equal to 0.50% of the note balance. Excess spread is about 13.9%, and as for trigger events certain early amortization events would end the revolving period and begin amortization.
Ratings include 'AAA' on the $329.4 million class A notes; 'AA' on the $44.9 million, class B notes; 'A' on the $25.6 million, class C notes and 'BBB' on the $60 million, class D notes.
If recent history is any indication, investors are willing to keep supporting the consumer loan asset class, and the OneMain notes in particular. After the most previous OneMain deal, the OMFIT 2022-2, came to market, the 'AAA'-rated, fixed-rate notes priced at 150 basis points over the benchmark, the low end of guidance. The 'A'-rated notes, meanwhile, came in five basis points tighter than guidance, at 230 bps over the benchmark, according to the Asset Securitization Report's database.
