KBRA Assigns Preliminary Ratings to Octane Receivables Trust 2019-1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Octane Receivables Trust 2019-1 (“OCTL 2019-1”), a powersports equipment loan ABS transaction.

OCTL 2019-1 will issue approximately $210.9 million of notes collateralized by approximately $228.0 million of fixed rate installment loans. The preliminary ratings reflect the initial credit enhancement levels ranging from 33.45% for the Class A notes to 8.50% for the Class D notes, which build to 39.30% and 14.35% for the Class A and Class D notes, respectively.

This transaction represents Octane Lending, Inc.’s (“Octane” or the “Company”) inaugural term ABS securitization. Octane Lending originates direct consumer loans and indirect consumer retail installment contracts through powersports and outdoor power equipment dealerships. Through its subsidiary Roadrunner Financial, Inc., the Company began offering financing products in June 2016. Octane partners with over 40 original equipment manufacturer brands and provides financing to customers purchasing all-terrain vehicles (ATVs), utility task vehicles (UTVs), dirt bikes, motorcycles, mowers, tractors, snowmobiles, personal watercraft, other powersports and outdoor power assets. Octane’s customer demographic is full credit spectrum and includes prime and nonprime obligors. The Company is headquartered in New York, New York and services loans through its indirect subsidiary Roadrunner Account Services, LLC located in Irving, Texas.

KBRA applied its Global General Rating Methodology for Asset-Backed Securities, Global Auto 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, Octane’s historical static pool data, 2008 powersport credit bureau performance data used by Octane to benchmark their performance, and static pool loss data for comparable automobile finance companies. KBRA also conducted an on-site operational review of Octane at its Irving, TX servicing center in October 2019. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.

To access ratings, reports and disclosures, click here.

Preliminary Ratings Assigned: Octane Receivables Trust 2019-1

Class

Preliminary Rating

Expected Initial

Class Principal

A

A (sf)

$154,014,000

B

BBB (sf)

$28,614,000

C

BB (sf)

$20,292,000

D

B (sf)

$7,979,000

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

Eric Neglia, Managing Director

(646) 731-2456

eneglia@kbra.com

Michael Pettigrew, Analyst

(646) 731-1208

mpettigrew@kbra.com

Abby Barkwell, Associate Director

(646) 731-3304

abarkwell@kbra.com

Business Development Contact:

Ted Burbage, Managing Director

(646) 731-3325

tburbage@kbra.com

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