Springleaf Finance is in the market with $2.62 billion of bonds backed by consumer loans, according to a presale report published by Kroll Bond Rating Agency.
SpringCastle Funding Asset-Backed Notes 2014-A is the sponsor’s second deal of the year and the first backed by loans acquired from HSBC Finance Corp. in April 2013. The transaction consists of five classes: the $1.6 billion class A has a preliminary AA’ rating and a stated maturity of 2023; the $427 million, A’ rated class B matures in 2027; the $331.2 million, BBB’ rated class C matures in 2033; the $199.8 million, BB’ rated class D matures in 2034 and the $61.5 million, B’ rated class D matures in 2035.
Credit enhancement levels range from 42.00% for the Class A notes to 4.75% for the Class E notes
Springleaf issued one consumer loan securitization in 2014, three consumer loan securitizations in 2013 and seven mortgage loan securitizations since 2011.
Springleaf purchased this portfolio in April 2013 and completed its transition of servicing in September 2013. As a result, KBRA has only nine months of performance data for this portfolio under Springleaf’s management of servicing. However, Springleaf is an experienced and capable servicer of both consumer loans and home loans
Among other ratings considerations is the fact that the latest transaction includes a portion of loans which are revolving so monthly draws may occur on the loans. Although some of the underlying loans are revolving, there is no revolving period included in the facility so monthly draws are funded from gross collections on loans. This may impact the funds available to make payments under the transaction waterfall.