A pool of secured and unsecured consumer installment loans that Oportun Financial Corp., had originated will provide collateral for $223.2 million in asset-backed securities from the Oportun Issuance Trust, series 2024-2.
The deal is expected to issue notes through four tranches of class A, B, C and D notes, according to Kroll Bond Rating Agency. All the notes have a Feb. 09, 2032 legal final maturity date, according to KBRA. The notes benefit from initial credit enhancement of 40.23% on the A tranche; 29.38% on the B tranche; 24.48% on the C tranche an 5.48% on the D tranche.
Oportun's core customer base is composed of borrowers who might have a limited credit history or none. It has been lending for 17 years and began offering loans partially secured by an auto title in 2020. It offers the loans through its 130 retail locations, their mobile platform, and its strategic partnerships. As of the statistical cutoff date, the current collateral balance is $168 million, with secured personal loans (SPLs) accounting for 7.4% of the pool.
The pool is composed of 42,241 loans, which have an average balance of $3,978. On a weighted average (WA) basis, the loans in the pool have an interest rate of 27.12%, a VantageScore 3.0 of 664, an original term of 36 months and a remaining term of 35 months.
Overcollateralization, subordination of the junior notes, a non-declining cash reserve account and excess spread provide credit enhancement to the notes. The transaction uses a sequential pay structure, where the class A notes receive principal payments before all subordinate notes. Overcollateralization represents 5.00% of the pool, and will increase to represent 14.00%, the non-declining reserve account will equal about 0.50% of the initial balance, and excess spread equals 14.43% of the pool.
The pool is heavily geographically concentrated, with 79.2% of loans in the collateral pool extended to borrowers in California, Texas and Florida.
KBRA assigns AA-, A-, BBB- and BB+ to the A, B, C and D tranches.
