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-ST3 (“UMPT 2019-ST3” or the “Issuer”). This is a $30.9 million consumer loan ABS transaction that closes on September 19, 2019.
This transaction represents the sixth KBRA-rated ABS securitization collateralized by unsecured consumer loans originated through the online marketplace lending platform operated by Upgrade, Inc. (“Upgrade”) and the third in 2019 from 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-ST3 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 32.50%. 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 $2.0 billion in loans with over 200,000 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 June 30, 2019 was $45 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 reviewed the transaction’s legal structure and transaction documents. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.
Preliminary Ratings Assigned: Upgrade Master Pass-Thru Trust, Series 2019-ST3
Initial Class Principal
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- Upgrade Master Pass-Thru Trust, Series 2019-ST3 Series Report
- Upgrade Master Pass-Thru Trust Q3 Platform and Servicer Review
- Global Consumer Loan ABS Rating Methodology
- Global Structured Finance Counterparty Methodology
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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.
Alla Mikhalevsky, CFA, Director
Brendan Carter, Associate Director
Eric Neglia, Managing Director
Rosemary Kelley, Senior Managing Director