A portfolio largely consisting of home improvement consumer loans will secure $350.2 million in asset-backed securities (ABS) to be sold to investors through the PowerPay Issuance Trust, series 2026-1.
The deal will offer the debt to noteholders through five tranches of class A, B, C, D and E notes, which all have a legal final maturity date of Nov. 18, 2047, according to Kroll Bond Rating Agency. The senior class of notes, with its AAA rating, has an initial credit enhancement level of 20.40%.
PowerPay 2026-1 is a 144A deal, and while the collateral pool primarily consists of home improvement consumer loans, but 5.7% of the pool financed health and wellness services. The company finances services such as medical spas, dental fertility and veterinary care, KBRA.
The deal will use a sequential pay structure, KBRA said, adding that initial overcollateralization, representing 2.00% of the note balance, helps preserve cash flow to the structure.
A non-declining reserve fund, representing 0.50% of the pool balance, will be added to the deal and fully funded when the deal closes, KBRA said. Asset Securitization Report's deal database finds the deal is expected to close on September 30.
Also, part of the deal is excess spread representing 1.11% of the notes, KBRA said.
KBRA says the underlying collateral is of prime quality. Borrowers have a weighted average FICO score of 772, higher than the 754 seen on PowerPay 2025-1, and more than 87.7% of the pool has a FICO score of 700. Also, the 21,209 loans in the pool have seasoning of 15 months, on a weighted average (WA) basis, a little shorter than the 19 months seen on the program's previous deal, the PowerPay 2025-1.
The loans have a balance of $16,851, with an average current contract rate of 8.68%. Also, the pool is geographically diverse, with Michigan, California and Illinois accounting for 7.4%, 7.4% and 6.7%, respectively.
KBRA assigns AAA, AA-, A-, BBB- and BB- to classes A, B, C, D and E, respectively.
