NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of Mariner Finance Issuance Trust 2020-A (MFIT 2020-A), a personal loan asset-backed securities transaction.
The financial impact of COVID-19 has resulted in high unemployment, which can adversely impact the performance of the transaction and consumer loans in general. Owing to this risk, KBRA increased its base case default assumptions for the subject pool in a manner that was similar to recent portfolio reviews of the sector. A review conducted in April 2020 resulted in six ratings from two MFIT securitizations being placed on Watch Status. The Watch Status Placements were maintained in a more recent review in July 2020, at which time the ratings on the most senior class in each securitization was affirmed. For more information on the reviews see U.S. Unsecured Consumer ABS Ratings Affirms and Maintains Watch Report and U.S. Unsecured Consumer ABS Securities on Watch Report.
The collateral in the MFIT 2020-A deal includes approximately $220 million of loans, as of May 31, 2020. The preliminary ratings reflect the initial credit enhancement levels of 29.85% for the Class A, 23.00% for the Class B notes, 17.25% for the Class C notes, and 9.50% for the Class D notes. Credit enhancement is comprised of overcollateralization, subordination of junior note classes, a cash reserve account, and excess spread.
This transaction is the first consumer loan, term ABS securitization issued by Mariner Finance, LLC (“Mariner” or the “Company”) in 2020. Mariner has also issued four public and one private consumer loan securitizations since 2017. The collateral in the transaction will consist of secured and unsecured, fixed-rate, non-revolving personal loans. Mariner was founded in 2002 and is currently a wholly owned subsidiary of MF Raven Holdings, Inc. (“MF Raven”) which, in turn, is wholly owned by WP Raven Acquisition, LLC (“WP Raven”). Mariner is indirectly owned by private equity funds managed by Warburg Pincus, LLC through WP Raven. The Company, together with its affiliates, is headquartered in Baltimore, Maryland and, as of June 30, 2020, has 476 branches across 24 states serving over 628,700 active customers. Mariner’s average customer is 54 years old with an annual income of approximately $52,131. Approximately 51% are homeowners that have been at their current residence for over ten years.
KBRA applied its Global Consumer Loan ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Mariner’s historical gross loss data. KBRA also conducted an operational assessment of Mariner, 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.
- Mariner Finance Issuance Trust 2020-A KCAT
- Global Consumer Loan ABS Rating Methodology
- Global Structured Finance Counterparty Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
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