LendingPoint Pass-Through Trust Series 2022-ST4 is preparing its fourth series of asset-backed securities with a goal of raising $57.6 million secured only by debt consolidation or credit card refinancing loans to fund a renovation or to make a major buy.
The deal’s sponsor, LendingPoint, refers to the consumer installment loans in the collateral pool as DTC loans and they are categorized as either newly originated or extension loans, according to the Kroll Bond Rating Agency. Extension loans are granted to existing customers in good standing, allowing the company to offer a more competitive interest rate or term to existing customers who have already repaid part of the existing loan.
Compared to the LPPT-ST3 transaction, according to KBRA, the collateral for the currently offered deal has a higher concentration of loans in grades A2 and B1, which have the lowest probability of default, as well as B2.
The LPPT Series 2022-ST4 will issue only one note grade rated “BBB-” offering over-collateralization and excess spread that provide credit enhancement. For the latter, the transaction has an initial credit enhancement of 31.5% on the Class A Notes.
KBRA noted that LPPT-ST4 uses a sequential payment structure in which the Class A Notes receive principal payments before the Certificates, allowing the structure to maintain the required overcollateralization amount. Gross excess spread losses are approximately 12.9% based on a weighted average contract rate of 19.4% less a service fee of 1.0% and an assumed weighted average maturity adjusted coupon of 5.5%.
KRBA expresses its confidence in LendingPoint’s in-house service and collections department, which consists of 199 employees. The service department starts collecting a loan one day overdue. The company is increasing collection intensity as it is becoming increasingly delinquent.
In what is seen as double-edged swords from a credit perspective, LendingPoint has a long lead time of 181 days before delinquent loans are charged. That’s much longer than the 121 days, which is considered more conservative, but the lender believes the window allows it to recover about 10% more loans.