New York-based bankroller Liberty Lending is preparing to issue a $161.61 million asset-backed security that uses unsecured consumer loans in the transaction, according to a presale report by Kroll Bond Rating Agency released on Wednesday.
KBRA’s Rahel Avigdor, senior director; Eric Neglia, senior managing director; and Brendan Buckley, analyst, wrote the report.
LL ABS Trust 2022-1 has a $116.1 million tranche with a $32.25% initial credit enhancement and is rated ‘AA’ by KBRA; a $20.42-million tranche with a 20.25% initial credit enhancement and an ‘A-’ rating; a $11.9-million tranche with a 13.25% initial credit enhancement and a ‘BBB-’ rating and a $13.19-million tranche with a 5.5% initial credit enhancement and a ‘BB’ rating.
The notes will be collateralized by a trust certificate backed by the unsecured loans. May 4 is the transaction date.
Founded seven years ago, Liberty Lending is an independent company that shares “common ownership with National Debt Relief,” KBRA said. This latest transaction is the fourth rated securitization for the company. Its managed portfolio has $451 million in loan receivables outstanding.
LL ABS Trust 2022-1 has Wilmington Savings Fund Society, FSB as its owner trustee, grantor trust trustee, and grantor trust certificate registrar. The funding banks and originators are FinWise Bank and MetaBank NA. Wilmington Trust NA is the indenture trustee, note registrar paying agent certificate registrar calculation agent and collateral agent
The average loan balance in LL ABS Trust 2022-1 is $15,368 and the weighted collateral interest rate is 21.21%. The original average weighted FICO score is 577. The majority of the loans—88.66% — are “E-loans” or “express settlement loans” to consumers enrolled in National Debt Relief’s debt settlement program. “The primary purpose of E-Loans is to accelerate the debt settlement process,” KBRA wrote. They are fixed rate with an original balance ranging from $3,500 to $75,000, KBRA said in the report.
The remaining 13.34% of the loans are “C-Loans” or consolidation loans for borrowers with FICO scores that are 600 and higher. The C-Loans are used in debt consolidation and the balances range from $3,500 to $40,000 and have fixed interest rates from 5.6% to 31.79%.
No state is more than 11% of the pool balance, but California (10.6%), Illinois (9.0%), Texas (8.4%), New York (8.4%) and Florida (7.2%) are the top five states represented, according to the report.
