Bond rating agency Kroll assigns preliminary ratings to Avant Loans Funding Trust 2016-B


NEW YORK–() – 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 ABS consumer loan transaction expected to close on May 5, 2016.

This transaction represents Avant, Inc. (“Avant” or the “Business”) Second-rated securitization secured by a certificate of trust backed by unsecured consumer loans originated from its online marketplace lending platform (“Avant platform”). There have been four previous 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-preferred consumers through the Avant Platform. Typical clients have a median annual income of $ 61,000 and an average FICO score of 580 to 720. Loans generally have an original term of between 24 and 60 months, an original balance of between $ 1,000 and $ 35,000, and a fixed APR between 9.95% and 36.00% depending on the risk profile of the borrower and the term of the loan. Borrowers are not charged an application fee, origination fee, or any prepayment penalties for loans. For the 12 months ended February 2016, $ 2.1 billion originated through the Avant Platform, compared to $ 640 million during the 12 months ended February 2015.

Avant retains a portion of the loans originated through the Avant platform. Avant does not fund loans through a peer-to-peer platform, but partners exclusively with institutional investors for the sale of entire loans.

The transaction has initial credit enhancement levels of 49.05% for Class A Negotiable Obligations, 26.80% for Class B Negotiable Obligations and 13.80% for Class C Negotiable Obligations. The 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, proposed capital structure, and historical gross loss data from the Avant Platform. KBRA also conducted an operational assessment of the Avant platform, as well as a review of the legal structure of the transaction and transaction documents. KBRA will also review the operating agreements and legal opinions of the transaction prior to closing.

Preliminary Ratings Assigned: Avant Loans Funding Trust 2016-B

Class

Preliminary rating

Expected principal of initial class

TO

A- (sf)

$ 179,141,000

B

BBB- (sf)

$ 76,726,000

C

BB (sf)

$ 44,828,000

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About the Kroll bond rating agency

KBRA is registered with the US Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). Additionally, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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