Lendbuzz, which focuses on providing auto financing products to an underserved consumer base is returning to the securitization market to raise $225.3 million in notes, through the Lendbuzz Securitization Trust 2023-3.
The company's obligors might have limited U.S. credit history, or none at all, and are unable to obtain financing from traditional lending sources. Ratings analysts at Kroll Bond Rating Agency note that the deal will issue notes through four classes of notes that have legal final maturity dates ranging from Oct. 15, 2024 through April 15, 2030.
The transaction will issue three classes of notes through four tranches, and is slated to close in a little more than a week, on October 12, according to the Asset Securitization Report's deal database. KBRA notes that the class A1 notes, which the trust should pay off fully in less than 13 months, have a preliminary rating of 'K1+'. KBRA expects to assign 'AA-' to the A2 notes; 'BBB+' to the class B notes; and 'BB+' to the class C notes. The company is the only agency rating the notes, according to the database.
Lendbuzz appears to be on the upswing, according to KBRA. On a year-to-year basis ending in Q2 2023, originations grew 37.6%, with dealership expansion, geographic expansion, increasing penetration into dealerships and retention of existing dealerships, the rating agency said. Revenues in Q2 2023, were up 94.6% from the period a year before.
As for the securitization, KBRA set its recovery assumption for LBZZ 2023-3 to 55.0%, an upward revision from 2023-2. Other metrics are higher, too. LBZZ 2023-3 has a higher average loan balance of $28,631, compared with $27,119 on the 2023-2 deal, a slightly higher weighted average (WA) FICO score of 703 at origination, whereas the FICO score on the LBZZ 2023-2 deal was 697. Its loan-to-value (LTV) ratio is 98.7%, virtually unchanged from the 98.5% seen on the LBZZ 2023-2.
On average, the collateral pool has a loan balance of $28,631, with an average coupon of 13.14%. After the note coupon and servicing rate, the notes will have a total gross excess spread of 2.70%.
