Kroll Bond Rating Agency Assigns Preliminary Ratings to Earnest Student Loan Program 2016-B LLC

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes issued by Earnest Student Loan Program 2016-B LLC (“EARN 2016-B”). This is a $184.543 million private student loan ABS transaction that is expected to close on May 12, 2016.

This transaction represents Earnest Operations LLC’s (“Earnest”, the “Servicer” or the “Company”) second rated securitization collateralized by unsecured student loans originated through its online lending platform. Earnest Student Loan Program 2016-B (“EARN 2016-B”) will issue Class A Notes and Class B Notes (together, the “Notes”) totaling $184.543 million. The proceeds from the sale of the Notes will be used primarily to purchase loans from Earnest’s existing warehouse facilities and a small portion of the proceeds will be used to delever the balance sheet.

The originator, sponsor, and servicer in this transaction is Earnest, a wholly owned subsidiary of Earnest Inc., who was established in November 2013 in order to originate consumer loans. Earnest Inc. was incorporated in Delaware in July 2013 and specializes in unsecured personal loans as well as student loans. Earnest has been successfully growing its consumer loan portfolio, and as of March 31, 2016, it has approximately $550 million student loans outstanding.

The transaction has initial credit enhancement levels of 11.19% for the Class A Notes and 7.21% for the Class B Notes of the initial pool balance. Credit enhancement consists of overcollateralization, subordination and a reserve account funded at closing.

KBRA applied its General Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure, and the gross loss expectation. KBRA also conducted an operational assessment of the Earnest, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Earnest Student Loan Program 2016-B LLC Presale Report, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Earnest Student Loan Program 2016-B LLC

Class         Preliminary Rating         Expected Initial Class Principal
A-1         A(sf)         $53,199,000
A-2         A(sf)         $123,456,000
B         BBB+(sf)         $7,888,000
               

Related Publications:

General Rating Methodology for Asset-Backed Securities

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Kroll Bond Rating Agency
Haksun Kim, 646-731-2412
Associate Director
hkim@kbra.com
or
Ed Pagano, 646-731-2449
Analyst
epagano@kbra.com
or
Rosemary Kelley, 646-731-2337
Managing Director
rkelley@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Contacts

Analytical:
Kroll Bond Rating Agency
Haksun Kim, 646-731-2412
Associate Director
hkim@kbra.com
or
Ed Pagano, 646-731-2449
Analyst
epagano@kbra.com
or
Rosemary Kelley, 646-731-2337
Managing Director
rkelley@kbra.com
or
Follow us on Twitter!
@KrollBondRating