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Upstart issuing $75.3M in monthly pass-through notes transaction

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An affiliate of Jefferies is sponsoring a third monthly issuance of consumer loan-backed securities through Upstart Network’s pass-through trust.

The $75.27 million Upstart Pass Through Trust Series 2020-ST3 notes are in a single Class A tranche with preliminary BBB- ratings from Kroll Bond Rating Agency.

Upstart CEO Dave Girouard

The loan pool has an average interest rate of 16.04%, contributing to a gross excess spread of 11.91% after a 3.5% note coupon and servicing fees.

Kroll has a base case loss estimate of 15.9%.

The loans were aggregated by JUPS, the deal’s sponsor and an affiliate of Jefferies and Jefferies Asset Funding. Proceeds will be used to purchase the loans and rights from Jefferies Asset Funding.

The transaction is the 11th securitization of unsecured consumer loans originated on the Upstart marketplace online platform, with partner banks Loans originated by Cross River Bank and FinWise Bank.

Upstart sells whole loans to institutional investors, and also sponsors issuances of asset-backed securities through its Upstart Securitization Trust platform. The pass-through program is sponsored by Jefferies. A January report from Kroll stated that about $640 million in loans have been sold into the pass-through trust on a monthly basis, as of November 2019.

Upstart, founded by former Google executives including chief executive Dave Girouard, marketed $937 million in asset-backed securities in 2019.

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