Upstart Network's pool of unsecured consumer loans will secure $320 million in asset-backed securities (ABS), sold to investors in the Upstart Securitization Trust platform's fourth deal in 2025.
The online lending marketplace operator is the sole sponsor of this deal, continuing a shift that started with the 2023-1 series of notes. The transaction will issue notes through five classes of A, B, C and D notes, according to Kroll Bond Rating Agency. The most senior tranche matures on Nov. 20, 2026, while the rest of the classes mature on Nov. 20, 2035, KBRA said.
Upstart Securitization Trust, 2025-4, is collateralized by loans that DR Bank and Cross River Bank, among others originated, and they account for a large majority of the outstanding pool balance, 74.8%.
The pool was established on Oct. 2, 2025, and includes loans that were originated after Upstart introduced its Upstart Macro Index to address increasing delinquency rates in previous years. The method supplements the company's underwriting by expressing how the external macroeconomic environment impacts the performance of its managed portfolio.
Since UMI's introduction in 2023, the company amended its underwriting and credit models that improved future vintages' performances.
UPST 2025-4 will repay investors sequentially. The notes also benefit from overcollateralization with a target set for 27.25%. Also, a non-declining reserve account, funded at closing, will equal 0.50% of the initial pool balance. Excess spread of 16.75% before losses is also incorporated into he deal, and the transaction includes a cumulative net loss amortization trigger.
Initial credit enhancement on the A1 and A2 notes is 60.40%, according to KBRA.
The rating agency assigns K1+ to the A1 notes; AA- to the A2 notes; A- to the class B notes; BBB- to the class C notes and BB- to the class D notes.
