The Upstart Network is preparing its second securitization of the year, selling $294.5 million in notes secured by a pool the unsecured consumer loans that it originated through it online lending platform.
The transaction, Upstart Securitization Trust, series 2025-2, will issue notes that will repay investors sequentially, until they finally mature on June 20, 2035, according to ratings analysts at Kroll Bond Rating Agency.
Class A, B, C and D notes will also benefit from credit enhancement that includes overcollateralization (OC). Initially, overcollateralization will equal 20.0% of the pool balance, with a target OC of 26.5%. When the deal closes, Upstart Securitization Trust will fund a non-declining cash reserve account equaling 0.50% of the initial pool balance, KBRA said.
Excess spread also boosts credit to the notes, amounting to a gross annual amount of 15.54%, the rating agency said.
A couple of amortization triggers also helps sustain the credit to the notes. A cumulative net loss trigger and a material modified loan ratio trigger will direct all available funds to the note principal payment if they are breached, KBRA said.
The 44,404 loans in the pool have an average balance $8,291, with a weighted average (WA) coupon of 23.84%, and a WA FICO score of 678.
The Upstart online marketplace makes consumer loans originated by the company's lending partners, including Cross River Bank, DR Bank, FinWise Bank, Customers Bank account for 39.6%, 38.9%, 15.3% and 6.2% respectively.
KBRA 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.
