KBRA Assigns Preliminary Ratings to OneMain Financial Issuance Trust 2018-2

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by OneMain Financial Issuance Trust 2018-2 (“OMFIT 2018-2”), a consumer loan asset-backed securities transaction.

The collateral in the OMFIT 2018-2 deal includes approximately $271.9 million of loans, as of the February 28, 2018 initial cutoff date. The transaction includes a five-year revolving period during which additional collateral may be funded in the transaction so long as it complies with certain eligibility criteria. The preliminary ratings reflect the initial credit enhancement levels ranging from 33.40% for the Class A notes to 3.70% for the Class E notes.

OneMain Holdings, Inc. (“OMH” or “OneMain”) is a consumer finance company which offers loan products through a nationwide network of branches and through its online platform. OMH completed its acquisition of OneMain Financial Holdings, LLC. (“OMFH”) on November 15, 2015 from CitiFinancial Credit Company for $4.49 billion in cash. OMH is now listed on the NYSE under the ticker symbol “OMF”.

On January 3, 2018, OMH entered into a Share Purchase Agreement with Springleaf Financial Holdings, LLC (“SFH”) and OMH Holdings, L.P., a Delaware limited partnership (“Purchaser”) (which Purchaser is owned by an investor group led by funds managed by affiliates of Apollo and Värde). Pursuant to the Share Purchase Agreement, Purchaser agreed to purchase shares of common stock of OMH beneficially owned by SFH (the “Purchased Shares”), which Purchased Shares represented approximately 40.6% of the outstanding common stock of OMH (the “Private Sale”) beneficially owned by a private equity fund managed by Fortress. Upon the closing of the Private Sale, Purchaser will own approximately 40.6% of the issued and outstanding shares of common stock of OMH calculated based on the number of shares of OMH’s common stock issued and outstanding. On February 26, 2018, SFH sold, in a secondary offering, shares of common stock of OMH beneficially owned by AIG, which shares of common stock represented approximately 3.0% of the issued and outstanding common stock of OMH.

KBRA applied our Global Consumer Loan ABS Rating Methodology as part of our analysis of the transaction’s underlying collateral pool, the proposed capital structure and legacy OMFH and legacy Springleaf’s historical annualized gross and net loss data. KBRA also conducted an operational assessment of OneMain, 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, OneMain Financial Issuance Trust 2018-2, which was published today at www.kbra.com.

Preliminary Ratings Assigned: OneMain Financial Issuance Trust 2018-2

Class   Preliminary Rating   Expected Initial Class Principal
A   AAA (sf)   $182,440,000
B   AA (sf)   $23,650,000
C   A (sf)   $15,230,000
D   BBB (sf)   $18,900,000
E   BB (sf)   $22,970,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical:
Haksun Kim, (646) 731-2412
Director
hkim@kbra.com
or
Alla Mikhalevsky, CFA, (646) 731-3356
Associate Director
amikhalevsky@kbra.com
or
Andrew Silverhardt, (646) 731-2492
Senior Analyst
asilverhardt@kbra.com
or
Rosemary Kelley, (646) 731-2337
Senior Managing Director
rkelley@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
Haksun Kim, (646) 731-2412
Director
hkim@kbra.com
or
Alla Mikhalevsky, CFA, (646) 731-3356
Associate Director
amikhalevsky@kbra.com
or
Andrew Silverhardt, (646) 731-2492
Senior Analyst
asilverhardt@kbra.com
or
Rosemary Kelley, (646) 731-2337
Senior Managing Director
rkelley@kbra.com