Oportun Issuance Trust, 2022-A, seeks to raise $400 million of capital markets debt by issuing debentures backed by installment loans backed by auto titles.

Oportun, Inc., sponsorship of asset-backed securities (ABS) business secured by nonprime loans. According to Morningstar, the deal has a term of 24 months DBRS. During the revolving period, eligible exposures will be sold to the Trust, subject to concentration limits and eligibility criteria. This structure is a change from the previous transaction, the Oportun 2021-C.

To support the 24 month revolving period there is a required overcollateralization (OC) of 2.25%. If the trust does not maintain the required OC amount, the revolving period ends and the bonds are amortized on an ongoing basis.

The transaction will issue notes in four grades, and DBRS expects to assign ratings ranging from “AA” for the $289 million Class A Notes to “BB” for the $11.2 million Class A Notes Class D range, DBRS said. Based in San Carlos, California, Oportun is a Community Development Financial Institution (CDFI) certified and serves consumers who it believes are underserved by traditional mainstream financial institutions for various reasons.

Oportun Inc. and MetaBank added the loans to the collateral pool. According to DBRS, PF Servicing will act as service provider and administrator of the transaction, while Systems & Services Technologies will act as backup service provider.

In terms of credit enhancement, the Oportun Issuance Trust, 2022-A has a fully funded reserve account equal to 0.25% of the initial principal amount of the Notes, DBRS. According to DBRS, the required OC amount is initially $9.2 million. The Notes also benefit from subordination in the form of Class B, C and D Notes and excessive diversification. The Notes carry fixed interest rates, which are determined at the closing of the transaction. The deal is expected to close on May 18, DBRS said.

Oportun has disbursed more than 4.9 million loan funds, totaling approximately $12.0 billion in loans originated. Among Oportun’s outstanding loans, balances range from $300 to $11,000 with a weighted average (WA) original tenor of about 35 months (compared to the industry’s secured personal loans of $2,525 to $20,300 with terms of 24 to 66 months).