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KBRA Assigns Preliminary Ratings to Octane Receivables Trust 2021-1

·4 min read

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Octane Receivables Trust 2021-1 ("OCTL 2021-1"), a powersports equipment loan ABS transaction.

OCTL 2021-1 will issue three classes of notes totaling $305.0 million. The transaction is expected to be collateralized by approximately $305.0 million of fixed rate installment loans, made to prime and non-prime borrowers as of the closing date. The preliminary ratings reflect the initial credit enhancement levels ranging from 16.85% for the Class A notes to 1.00% for the Class C notes, which build to 20.85% and 5.00% for the Class A and Class C notes, respectively.

Octane Lending, Inc. ("Octane" or the "Company") originates direct consumer loans and indirect consumer retail installment contracts through powersports and outdoor power equipment dealerships. Through its subsidiary, Roadrunner Financial, Inc. ("Roadrunner"), the Company began offering financing products in June 2016. Octane partners with over 40 original equipment manufacturer brands ("OEMs") and provides financing to customers purchasing utility vehicles ("UTVs"), all-terrain vehicles ("ATVs"), cruisers, sports bikes, personal watercraft, mowers, dirt bikes, golf carts, snowmobiles, trikes and other powersports and outdoor power assets. Octane’s customer demographic is full credit spectrum and includes prime and non-prime obligors. The Company is headquartered in New York, New York and services loans through its indirect subsidiary, Roadrunner Account Services, LLC ("RAS"), located in Irving, Texas.

KBRA applied its General Global Rating Methodology for Asset-Backed Securities, Auto Loan ABS Global 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 considered its operational review of Octane, which was conducted at its Irving, TX servicing center in October 2019, as well as several business updates with the Company since that time. Operative agreements and legal opinions will be reviewed prior to closing.

Click here to view the report. To access ratings and relevant documents, click here.

Related Publications

Disclosures

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 Information Disclosure Form(s) 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 Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210421005977/en/

Contacts

Analytical Contacts

Alla Mikhalevsky, CFA, Director (Lead Analyst)
+1 (646) 731-3356
alla.mikhalevsky@kbra.com

Michael Pettigrew, Senior Analyst
+1 (646) 731-1208
michael.pettigrew@kbra.com

Zara Shirazi, Senior Director
+1 (646) 731-3326
zara.shirazi@kbra.com

Eric Neglia, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2405
eric.neglia@kbra.com

Business Development Contact

Ted Burbage, Managing Director
+1 (646) 731-3325
tburbage@kbra.com