Mariner Finance Issuance Trust 2024-A: A Promising Personal Loan Asset-Backed Securities Transaction

In a significant development in the financial landscape, Kroll Bond Rating Agency (KBRA) has assigned a preliminary rating to one class of notes issued from Mariner Finance Issuance Trust 2024-A (MFIT 2024-A), a personal loan asset-backed securities transaction. This transaction marks a milestone for Mariner Finance, LLC, a leading provider of personal loans, as it embarks on its first consumer loan, term ABS securitization in 2024.

Unlocking the Potential of Personal Loan Asset-Backed Securities

Robust Collateral Pool and Credit Enhancement

The MFIT 2024-A transaction will issue five classes of notes totaling $300 million, collateralized by at least $343.453 million of secured and unsecured, fixed-rate, personal loans originated by Mariner Finance. The preliminary rating reflects an initial credit enhancement level of 43.50% for the Class A notes, a testament to the strength of the collateral pool. This credit enhancement is comprised of a multi-layered approach, including overcollateralization, subordination of junior note classes, a cash reserve account, and excess spread.

Revolving Period and Reinvestment Criteria

The transaction includes a three-year revolving period, during which additional collateral may be funded, provided it complies with strict eligibility criteria and the resulting collateral pool maintains its integrity within the reinvestment criteria. This flexibility allows Mariner Finance to actively manage the asset pool, ensuring the continued performance and stability of the transaction.

Mariner Finance's Proven Track Record

Mariner Finance, founded in 2002, has a proven track record in the consumer loan securitization market. The company has previously issued nine public and one private consumer loan securitizations since 2017, demonstrating its expertise and commitment to the asset-backed securities space.

Ownership and Operational Strength

Mariner Finance is a wholly owned subsidiary of MF Raven Holdings, Inc., which is indirectly wholly owned by WP Raven Acquisition, LLC, a private equity fund managed by Warburg Pincus, LLC. This ownership structure provides Mariner Finance with the financial backing and operational support to continue its growth and expansion. As of June 30, 2024, Mariner Finance has 516 branches across 27 states, serving over 727,000 active customers, and reported a positive net income for the first quarter of 2024.

Comprehensive Credit Analysis

KBRA's analysis of the MFIT 2024-A transaction involved a thorough examination of the underlying collateral pool, the proposed capital structure, Mariner Finance's historical annualized gross loss data, and an operational assessment of the company. The rating agency also conducted a review of the transaction's legal structure and supporting documentation, ensuring a comprehensive understanding of the transaction's risks and mitigants.

Commitment to ESG Principles

In addition to the traditional credit analysis, KBRA also applied its ESG Global Rating Methodology to assess the transaction's alignment with environmental, social, and governance (ESG) principles. This holistic approach ensures that the MFIT 2024-A transaction not only meets the financial criteria but also upholds the highest standards of responsible and sustainable practices.

Positive Outlook for the Personal Loan ABS Market

The MFIT 2024-A transaction represents a significant development in the personal loan asset-backed securities market, showcasing the continued growth and maturation of this asset class. As consumer demand for personal loans remains strong, and lenders like Mariner Finance demonstrate their ability to originate and securitize these assets, the outlook for the personal loan ABS market remains positive, offering investors a compelling opportunity to diversify their portfolios and capitalize on this expanding segment of the financial landscape.