KBRA Assigns Preliminary Ratings to Kabbage Asset Securitization LLC, Series 2017-1 Second Additional Notes

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of additional Series 2017-1 notes (the “Series 2017-1 Additional Notes”) issued by Kabbage Asset Securitization LLC.

Kabbage Asset Securitization LLC (the “Issuer”) issued $525 million of Series 2017-1 Class A, Class B, Class C and Class D Notes on March 20, 2017 and subsequently issued $25 million of additional Series 2017-1 Class A, Class B, Class C, and Class D Notes on August 28, 2017 (collectively, the “Series 2017-1 Notes”). The Series 2017-1 Additional Notes include $60 million of additional Series 2017-1 Class A, Class B, Class C, and Class D Notes (together with the Series 2017-1 Notes, the “Notes”). The ratings for the $550 million of previously issued Series 2017-1 Notes will be confirmed in conjunction with the issuance of the Series 2017-1 Additional Notes. The Series 2017-1 Additional Notes will have the same terms as the corresponding classes of Series 2017-1 Notes, including same Note Rate, Advance Rate and Legal Final Payment Date. The proceeds of the sale of the Series 2017-1 Additional Notes will be used to provide extra funding capacity for Kabbage.

Founded in 2009, Kabbage is a financial technology company that uses its proprietary risk scoring models, transactional data, technology systems and platform to provide fully automated, online access to business loans for small- and medium-sized businesses. The Kabbage business loan program is offered via Kabbage’s automated loan application, underwriting and servicing platform, www.kabbage.com.

The Notes will be secured by a revolving pool of receivables consisting of (i) business loans or (ii) merchant cash advances. The transaction benefits from sufficient credit enhancement comprised of overcollateralization, subordination of the junior classes of Notes, a reserve account and excess spread, as well as a dynamic structure that accelerates principal payments on the Notes in the event of weak performance. When the initial transaction closed in March 2017 it featured a 36-month revolving period (the “Revolving Period”), which currently has 22 months remaining, during which time principal collections may be reinvested to purchase additional receivables, based on certain eligibility requirements. The Revolving Period will end on the earlier of (i) the payment date occurring in the month that is 36 months after the initial closing date and (ii) the date on which a Rapid Amortization Event has occurred.

The Notes will be “expandable” term notes such that at any time during the Revolving Period, the Issuer may periodically issue additional Notes, so long as certain conditions are met, including receipt of rating agency confirmation. The consent of existing noteholders will not be required for these additional issuances, and investors should note that any additional note issuance would dilute the control and vote of existing noteholders.

KBRA analyzed the transaction using KBRA’s Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017.

For complete details on the analysis, please see KBRA’s pre-sale report, Kabbage Asset Securitization LLC, which was published today at www.kbra.com.

       
Additional Notes     Preliminary Rating     Initial Principal Balance
Class A     A (sf)     $44,444,000
Class B     BBB (sf)     $9,525,000
Class C     BB (sf)     $3,174,000
Class D     B (sf)     $2,857,000
 
           
Existing Notes     Rating    

Original
Principal
Balance

   

Current Principal
Balance

Class A     A (sf)     $388,889,000     $407,407,000
Class B     BBB (sf)     $83,333,000     $87,301,000
Class C     BB (sf)     $27,778,000     $29,101,000
Class D     B (sf)     $25,000,000     $26,191,000
 

Representations and 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 entitled Disclosure is available at the following link: Kabbage Asset Securitization LLC Representations and Warranties Disclosure.

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 Contacts:
Chris Baffa, Associate Director
(646) 731-3312
cbaffa@kbra.com
or
Alan Greenblatt, Director
(646) 731-2496
agreenblatt@kbra.com
or
Lenny Giltman, Managing Director
(646) 731-2378
lgiltman@kbra.com
or
Anthony Nocera, Senior Managing Director
(646) 731-2350
anocera@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Chris Baffa, Associate Director
(646) 731-3312
cbaffa@kbra.com
or
Alan Greenblatt, Director
(646) 731-2496
agreenblatt@kbra.com
or
Lenny Giltman, Managing Director
(646) 731-2378
lgiltman@kbra.com
or
Anthony Nocera, Senior Managing Director
(646) 731-2350
anocera@kbra.com