Oportun Issuance Trust, 2022-A, is aiming to raise $400 million from the capital market debt, issuing notes that will be secured by installment loans secured by automobile titles.
Oportun, Inc., sponsoring the asset-backed securities (ABS) deal, which is secured by nonprime loans. The deal has a 24-month revolving period, according to Morningstar | DBRS. During the revolving period eligible receivables will be sold to the trust subject to concentration limits and eligibility criteria. This structure is a change from the previous transaction, the Oportun 2021-C.
Supporting the 24-month revolving period, there is a required overcollateralization (OC) amount of 2.25%. If the trust does not maintain the required OC amount, then the revolving period will end and the bonds will amortize sequentially.
The deal will issue notes through four classes, and DBRS expects to assign ratings ranging from ‘AA’ on the $289 million, class A notes to ‘BB’ on the $11.2 million class D notes, DBRS said. Based in San Carlos, Calif., and certified as a Community Development Financial Institution (CDFI), Oportun serves consumers that it says are underserved by traditional, mainstream financial institutions for various reasons.
Oportun Inc. and MetaBank originated the loans in the collateral pool. PF Servicing will serve as the deal’s servicer and administrator, while Systems & Services Technologies will be the back-up servicer, according to DBRS.
As for credit enhancement, Oportun Issuance Trust, 2022-A, has a fully funded reserve account, equaling 0.25% of the initial principal balance of the notes, DBRS. Initially, the required OC amount equals $9.2 million, according to DBRS. The notes will also benefit from subordination in the form of class B, C and D notes, as well as excess spread. The notes will bear fixed interest rates, to be determined when the deal prices. The deal is expected to close on May 18, DBRS said.
Oportun has disbursed more than 4.9 million loan funds, a total of about $12.0 billion in credit extended. Among Oportun’s outstanding loans, balances range from $300 to $11,000, with a weighted average (WA) original term of about 35 months (compared with the industry’s secured personal loan balance of $2,525 to $20,300, with terms of 24 to 66 months).
