Unsecured consumer loans from Reach Financial will secure a $236 million securitization through the Reach ABS Trust 2024-1, using the proceeds to repay outstandings on its loan facilities.
Due to close on February 5, according to the Kroll Bond Rating Agency, the transaction will issue classes A, B, C and D notes through four tranches. In addition to sponsoring the deal, Reach Financial is also servicer, according to the rating agency. Nelnet is acting as backup servicer on the deal.
Atlas SP Securities, CapitalOne Securities and SunTrust Robinson Humphrey Capital Markets are managers on the deal, according to the Asset Securitization Report's deal database.
Early guidance for the notes is for the class A notes to price between 150-160 basis points over the three-month interpolated yield curve. The class C notes might also price within a range of 300-325 bps over the 3M I-Curve, according to the ASR database.
KBRA expects to assign ratings of AA, A-, BBB- and BB to classes A, B, C and D, respectively.
Reach is an independent lending company that is majority owned by individual owners of National Debt Relief, according to KBRA. Profitable every year from 2018 through 2023, Reach has $590 million in borrowing capacity under three loan facilities with staggered maturities. As of December 31, 2023, the facilities had an availability of $333.5 million.
The trust will issue and repay the notes through a sequential pay structure. The notes benefit from an initial overcollateralization level of 5.50% of the cutoff pool balance. Target overcollateralization will be the lower of 15.50%of the current pool balance and 10.75% of the cutoff date pool balance, according to KBRA. All of the notes have a legal final maturity date of Feb. 18, 2031, the rating agency said.
A cash reserve account and gross excess spread, of 13.54%, also provide credit enhancement to the notes. Further, the notes benefit from an amortization trigger, where the transaction will enter full turbo where all available funds will be used to sequentially pay down the outstanding notes, should an amortization event occur.
