NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Avant Loans Funding Trust 2016-B (“AVNT 2016-B”). This is a $300.7 million consumer loan ABS transaction that is expected to close on May 5, 2016.
This transaction represents Avant, Inc.’s (“Avant” or the “Company”) second rated securitization collateralized by a trust certificate backed by unsecured consumer loans originated under its online marketplace lending platform (“Avant Platform”). There have been four prior unrated securitizations, in which Avant or Avant’s institutional investors were the sponsors and the collateral was unsecured consumer loans originated under the Avant Platform.
Founded in 2012, Avant is located in Chicago, Illinois and operates an online lending platform. Personal installment loans are offered to non-prime consumers through the Avant Platform. Typical customers have an average annual income of $61,000 and average FICO score of 580 - 720. Loans typically have an original term of between 24 – 60 months, an original balance between $1,000 to $35,000 and a fixed APR between 9.95% - 36.00% depending on the borrower’s risk profile and loan term. Borrowers are not charged an application fee, origination fee or any prepayment penalties on the loans. For the 12 months ended February 2016, $2.1 billion was originated through the Avant Platform, up from $640 million during the 12 months ended February 2015.
Avant retains a portion of loans originated through the Avant Platform. Avant does not fund loans through a peer-to-peer platform, but instead partners exclusively with institutional investors for whole loan sales.
The transaction has initial credit enhancement levels of 49.05% for the Class A Notes, 26.80% for the Class B Notes and 13.80% for the Class C Notes. 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 Avant Platform’s historical gross loss data. KBRA also conducted an operational assessment of the Avant Platform, 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.
Preliminary Ratings Assigned: Avant Loans Funding Trust 2016-B
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