Oportun Issuance Trust, 2022-A, aims to raise $400 million from capital market debt, by issuing notes that will be secured by auto-securitized installment loans.
Oportun, Inc., sponsoring the asset-backed securities (ABS) deal, which is secured by non-preferential loans. The agreement has a renewable period of 24 months, according to Morningstar | DBRS. During the revolving period, eligible receivables will be sold to the trust subject to concentration limits and eligibility criteria. This structure is a change from the previous transaction, the Oportun 2021-C.
In support of the 24-month renewable period, there is a required Overcollateralization (OC) amount of 2.25%. If the trust does not maintain the required overcollateralization amount, the renewal period will end and the bonds will amortize sequentially.
The deal will issue notes across four classes, and DBRS plans to assign ratings ranging from “AA” on the $289 million Class A notes to “BB” on the $11.2 million Class D notes. of dollars, DBRS said. Based in San Carlos, Calif., and certified as a Community Development Financial Institution (CDFI), Oportun serves consumers who it believes are underserved by mainstream and mainstream financial institutions for a variety of reasons.
Oportun Inc. and MetaBank created the loans in the collateral pool. PF Servicing will serve as the repairer and administrator of the agreement, while Systems & Services Technologies will serve as the backup repairer, according to DBRS.
For credit enhancement, Oportun Issuance Trust, 2022-A, has a fully funded reserve account, equivalent to 0.25% of the original principal note balance, DBRS. Initially, the amount of the additional cost required is equivalent to $9.2 million, according to DBRS. The notes will also benefit from subordination in the form of class B, C and D notes, as well as an excess spread. The notes will bear fixed interest rates, to be determined at the price transaction. The deal is expected to close on May 18, DBRS said.
Oportun has disbursed over $4.9 million in loan funds, totaling approximately $12.0 billion in credit granted. Among Oportun’s outstanding loans, balances range from $300 to $11,000, with an initial weighted average (WA) term of approximately 35 months (compared to the industry’s secured personal loan balance of $2,525 to $20,300, with terms of 24 to 66 months).