KBRA Assigns Preliminary Ratings to Upgrade Master Pass-Thru Trust, Series 2019-ST1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class
of notes issued by Upgrade Master Pass-Thru Trust, Series 2019-ST1
(“UMPT 2019-ST1” or the “Issuer”). This is a $30.66 million consumer
loan ABS transaction that is expected to close on June 11, 2019.

This transaction represents the third ABS securitization collateralized
by unsecured consumer loans originated through the online marketplace
lending platform operated by Upgrade, Inc. (“Upgrade”) and the first in
2019 from the Upgrade Master Pass-Thru Trust. JUPG (an affiliate of
Jefferies LLC and Jefferies Asset Funding LLC) has aggregated loans to
be contributed to the Master Trust which will issue the UMPT 2019-ST1
Notes and Certificates. The proceeds from the sale of the Notes will be
used to purchase the loans and related rights from Jefferies Asset
Funding LLC (the “Depositor”), who purchased the loans from JUPG (the
Transferor). The Depositor will in turn sell the loans to the Issuer.

The transaction has initial credit enhancement levels of 30%. Credit
enhancement consists of excess spread, and overcollateralization.

Established in May 2016, with the first loan originated in April 2017,
Upgrade operates an online marketplace lending platform (www.upgrade.com)
(the “Platform”). Upgrade was co-founded by Renaud Laplanche, co-founder
and former CEO of LendingClub Corporation, along with former LendingClub
employees. The Platform offers fixed rate, fully amortizing unsecured
consumer loans with original balances ranging from $1,000-$50,000 and
original terms of three years and five years. These loans are
categorized within three segments based on certain credit-grading
criteria: Prime Plus, Prime, and Near Prime. The loans on the Platform
are originated by WebBank. Generally, the primary purpose of the loan is
debt consolidation. Since inception the Platform has facilitated over
$1.5 billion in loans with over 100,000 borrowers served. Upgrade has
raised $150 million in total equity by investors including CreditEase,
VY Capital, Union Square Ventures and Sands Capital. Upgrade’s total
Stockholder’s Equity as of March 31, 2019 was $50 million.

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 Upgrade’s historical gross loss data. KBRA also conducted
an operational assessment of the Platform and will review the
transaction’s legal structure and transaction documents. KBRA will also
review the operative agreements and legal opinions for the transaction
prior to closing.

Preliminary Ratings Assigned: UMPT 2019-ST1

Class       Preliminary Rating       Initial Class Principal
A       BBB- (sf)       $30,660,000
           

To access ratings, reports and disclosures, click 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
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) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

Contacts

Analytical Contacts:
Alla
Mikhalevsky, CFA, Director
(646) 731-3356
amikhalevsky@kbra.com

Brendan Carter, Associate Director
(646) 731-3315
bcarter@kbra.com

Eric Neglia, Managing Director
(646) 731-2456
eneglia@kbra.com

Rosemary Kelley, Senior Managing Director
(646) 731-2337
rkelley@kbra.com

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