The next consumer-loan securitization for Oportun Inc. (Nasdaq: OPRT) is expected to include loans from a new lending partnership established with MetaBank, which expanded Oportun’s high-risk loan program to thin-file borrowers nationwide.
The $500 million Opportun Issuance Trust (OPTN) 2021-B will also likely be the first of its 17 securitizations to include a more sizeable portion of loans partially secured by auto title loans.
According to ratings agency presale reports, Oportun will place $230.2 million in loans to borrowers lacking credit histories or FICO credit scores into a collateral pool securing the issuance of four classes of notes.
But the loan pool will expand to $511.5 million between its expected May 10 closing until the end of a three-month prefunding period on July 31 – during which time Oportun can make additional loan assignments to the pool from its managed loan portfolio that stood at $1.9 billion, as of Dec. 31, 2020.
The loans will have to meet minimum criteria, but could potentially lower the credit metrics of the identified pool that includes a weighted average interest rate of 30.28% and average original terms of 34 months with 10 months of seasoning.
The deal also has a three-year revolving period in which new assets can be added to the pool, including renewal loans for existing customers (renewal loans already account for more than 84% of the loan balances in the initial OPTN 2021-B pool).
The deal’s transaction parameters also allow Oportun to include accounts originated through its fledgling secured loan program. Last April, the company introduced a loan product that could be partially secured by an auto title.
While those secured loans are offered in California, the program is expected to be expanded to Florida, Texas and potentially other states during the revolving period. Up to 10% of the collateral pool of OPTN 2021-B can be secured loans.
Loans from its partnership with nationally chartered MetaBank will also be part of the mix, according to presale reports from Kroll Bond Rating Agency and DBRS Morningstar. That partnership is expected to launch in mid-2021, and expand Oportun’s loan programs outside of its current 12-state footprint from where it issues loans via state licenses.
DBRS and KBRA diverge on note ratings in the deal. KBRA applied a preliminary A rating to the $340.15 million Class A notes tranche that DBRS has assigned an early AA rating. The $71.6 million Class B loans are rated BBB by KBRA and A by DBRS; DBRS alone assigned ratings to the subordinate Class C notes (BBB) and Class D bonds (BB high).
Oportun will use note proceeds to pay off the balance of one of its 2018 securitization deals, and roll over the existing loans into the new trust.
Kroll noted an expected net loss range of 8.8%-10.%, lower than Oportun’s first deal of 2021 (which was 9.5%-11.5%).
