GreenSky is preparing to sell $500 million in asset-backed securities (ABS) collateralized by a revolving pool of economic participations in a pool of fixed-rate home improvement loans.
Unlike previous GreenSky transactions, which securitized proceeds from several loan programs including reduced rate loans, zero interest loans and deferred loans, the current deal will only be backed by deferred loans.
GreenSky is the deal's sponsor, administrator and servicer of the underlying contracts, according to Fitch.
Structured as a rule 144A, the transaction will sell notes through four tranches of class A, B, C and D notes, which all have a legal final maturity date of May 15, 2041, according to Kroll Bond Rating Agency.
Fitch Ratings, whose analysts also assessed the notes, finds that the class A, B, C and D notes benefit from credit enhancement levels of 26.28%, 19.79%, 11.49% and 9.22%, respectively.
The deal has a two-year revolving period, scheduled to end in June 2028, when collections from the asset pool can be used to purchase new economic participations, if they meet eligibility requirements and concentration limits, the rating agency said.
GreenSky's structure also includes a reserve account funded at closing with an amount equaling 0.50% of the initial note balance and excess spread equaling 15.50%, KBRA said.
Further, interest will be paid to classes A, B, C and D sequentially, and during the revolving period the transaction will not pay any principal on the notes. When the amortization period begins, the transaction will make principal payments to the classes A, B, C and D notes sequentially, according to KBRA.
Fitch notes that the initial securitized pool will be composed of unsecured loans, but the transaction can incorporate economic participations in secured loans. The revolving period is also subject to certain early amortization events, the rating agency said.
The loans include a deferred interest promotional period of six, 12, 18 or 24 months when interest is billed, but might not be due, and principal also might not be due.
The initial collateral pool is composed of 38,876 loans, with an average loan size of $14,098. Also, the loans have an original term of 92 months and borrowers have a credit score of 802, on a weighted average (WA) basis.
KBRA assigns AAA, AA, A and BBB to classes A, B, C and D, respectively. Fitch assigns AAA, AA, A and BBB to classes A, B, C and D.
