Octane Receivables Trust is returning to raise $305.19 from the securitization market, secured by a pool of prime and near-prime loans on an array of new and used power sport and outdoor power equipment, including classic bikes, dirt bikes, tractors and snowmobiles.
Truist Securities is the structuring lead manager on the deal, Octane Receivables Trust 2023-1, with several slight—albeit positive—collateral changes, according to a pre-sale report from S&P Global Ratings. Deal sponsor Octane Lending originates direct consumer loans and indirect consumer retail installment contracts by partnering with more than 40 original equipment-manufacturing brands, according to Kroll Bond Rating Service.
The sources of the loans vary widely, but they still paint a picture of the types of borrowers in the pool. For one, the loans have an average balance of $13,367, compared with $12,954 in the OCTL 2022-2 deal, according to KBRA.
The current deal has a slightly higher weighted average (WA) FICO score of 705, up from 700, compared with the OCTL 2022-2, S&P said. Octane Receivables 2023-1 also has a greater concentration of prime receivables, at 57.09%, up from 56.06% in the OCTL 2022-2, and a (WA) loan-to-value ratio of 115.57%, down from 116.97%, according to S&P.
New vehicles accounted for a substantial majority of the pool, 73.26%, while used vehicles are 26.74% of the collateral pool, according to KBRA.
The deal is fairly well diversified, geographically. California has the highest concentration of borrowers in the pool balance, at 14.77%; Texas follows at 14.11% and Florida is next, with 10.13%, KBRA said.
Collateral changes were not the only ones in store for the deal, While the previous transaction had issued five classes of notes, and total hard credit enhancement increased on the A, B, and D notes, initial hard credit support decreased for the class C notes, S&P said.
Overcollateralization, subordination in the junior class notes, a reserve account funded at closing and excess spread provide credit enhancement to the notes.
KBRA expects to assign ratings of 'AAA' from the $218.7 million class A notes to 'BB+' on the $11.8 million class E notes. S&P's ratings will range from 'AAA' on the senior notes to 'BB' on the class E notes.
