NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency, LLC (KBRA) assigns preliminary ratings to three classes of notes issued by LL ABS Trust 2020-1 (“LLEND 2020-1”). This is a $121.53 million consumer loan ABS transaction that is expected to close on September 23, 2020.
This transaction represents Liberty Lending, LLC’s (“Liberty”, or the “Company”) second rated securitization. The Company issued its first rated securitization (“LLEND 2019-1”) in November 2019.
Liberty was founded in 2015 and is based in New York, NY. Liberty is an independent company that shares common ownership with National Debt Relief, LLC. (“NDR”). Individual owners of NDR own the majority of Liberty, with the remaining equity interest distributed among Liberty’s management team and key employees. Liberty is a profitable company with approximately $56 million of equity as of July 31, 2020. The Company has been profitable starting in 2018 and through July 31, 2020. As of July 31, 2020, Liberty has $265 million in loan receivables outstanding.
The Company offers the following products:
- Express Settlement Loans (“E-Loans”) to consumers who are enrolled in a debt relief program administered by NDR and who have exhibited strong deposit behavior in NDR’s programs. The primary purpose of E-Loans is to accelerate the debt settlement process.
- Consolidation Loans (“C-Loans”) for qualified borrowers who are not enrolled in a debt relief program. The primary purpose of C-Loans is debt consolidation.
Only E-loans will be included in LLEND 2020-1. E-Loans are fixed rate, fully amortizing unsecured consumer loans.
The transaction has initial credit enhancement levels of 41.60% for the Class A Notes, 29.00% for the Class B Notes, and 12.00% for the Class C Notes. Credit enhancement consists of excess spread, overcollateralization, subordination (in the case of the Class A and Class B Notes) and a reserve account funded at closing.
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 and the proposed capital structure. KBRA also conducted an operational assessment of Liberty, 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.
- LL ABS Trust 2020-1 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 Limited is registered with ESMA as a CRA.
Melvin Zhou, CFA, Senior Director (Lead Analyst)
+1 (646) 731-2412
Rahel Avigdor, Director
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Michael Polvere, Senior Analyst
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Eric Neglia, Managing Director (Rating Committee Chair)
+1 (646) 731-2456
Business Development Contact
Ted Burbage, Managing Director
+1 (646) 731-3325