OneMain Financial is preparing to package $555.6 million of subprime consumer loan receivables in its first asset-backed securitization since its acquisition by Springleaf Financial from Citigroup was completed in November.
The OneMain Financial Issuance Trust 2016-1 notes are arranged in four classes of 13-year notes with initial tranches totaling $500 million, according to a Kroll Bond Agency presale report. The securitization includes a three-year revolver period for additional collateral.
The stack includes $353.05 million in Class A notes with a preliminary structured finance ‘AA’ rating by Kroll and a 37.45% credit enhancement; $60.4 million in Class B notes rated ‘A’ with a 26.5% enhancement; $45 million in Class C notes rated ‘BBB’ with an 18.4% enhancement; and $41.1 million in notes rated ‘BB’ with an 11% enhancement.
The interest rates are to be determined, with a projected sale date on Feb. 10. OneMain is pooling 79,766 loans that average four years with balances of $6,965. Being subprime loans, the average weighted coupon is 26.04% with a customer base averaging FICO scores of 640. More than 85% are unsecured, with the remainder being unsecured auto loans.
The parameters are similar to OneMain’s last securitization, a $324.6 million notes offering last September.
The credit enhancements are comprised of overcollaterization, the subordination of junior note classes, a cash reserve account and excess spread, according to Kroll.
Wells Fargo is the indenture trustee.
OneMain Financial Holdings is now the merged entity of the former OneMain unit of Citigroup and Springleaf, although both platforms will be operated independently during the first year of the $4.49 billion merger. The new OneMain has $15 billion in core consumer net finance receivables on its books as of Sept. 30 of last year, and carries a corporate rating of ‘B3’ by Moody’s Investors Service and ‘B’ by Standard & Poor’s.
Last year, OneMain issued three securitized consumer loan portfolios as part of Citi while Springleaf issued two. Both lenders issued two securitizations apiece in 2014.
