NEW YORK–(BUSINESS WIRE)–#KBRA–KBRA assigns preliminary ratings to three classes of Series 2023-1 Notes (“OnDeck 2023-1”) issued by OnDeck Asset Securitization Trust IV, LLC. OnDeck Asset Securitization Trust IV, LLC will issue three classes of Series 2023-1 Notes, (collectively, the “Notes” or “Series 2023-1 Notes”) totaling $227.051 million.
The proceeds of the sale of the Series 2023-1 Notes will be used to fund the Series 2023-1 reserve account and the remaining amount of the net proceeds will be used to purchase fixed-rate small business loans that are either term loans or funded portions of lines of credit originated through the OnDeck platform. The Notes are “expandable” term notes such that at any time during the revolving period, the Issuer may periodically issue additional Notes, up to a maximum amount of $378.417 million, as long as certain conditions are met, including receipt of Rating Agency Confirmation.
On Deck Capital Inc., which was founded in 2006, and ODK Capital, LLC, a wholly owned subsidiary of Enova formed in December 2020, (collectively “OnDeck” or the “Company”) operates through an online lending platform (www.ondeck.com) (the “OnDeck Platform”) to originate small business loans in the U.S. and Australia through its subsidiaries. Since its founding, OnDeck has originated over $15.3 billion in loans to over 133,000 small businesses. As of October 2020, On Deck Capital, Inc. became a wholly owned subsidiary of Enova International, Inc. (“Enova”). Enova is a publicly traded fintech company, under the ticker “ENVA” historically focused on non-prime consumer lending and to a lesser degree small business lending. The combined company continues originate small business loans under the OnDeck brand.
OnDeck 2023-1 represents OnDeck’s sixth small business ABS securitization. The Notes will be secured by a revolving pool of receivables consisting of Term Loans and LOC loans that were underwritten under OnDeck’s credit guidelines and originated through the OnDeck Platform to small businesses in the US. The transaction features a revolving period (the “Revolving Period”), which will end on the earlier of (i) the close of business on September 17, 2026 or (ii) the date on which an Amortization Event has occurred. The Issuer can prepay the Notes in full on any business day on or after August 1, 2026, the (“Series 2023-1 Permitted Prepayment Date”).
KBRA applied its Global General Rating Methodology for Asset-Backed Securities as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA considered its operational review of the Company, as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.
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- General Global ABS Rating Methodology for Asset Backed Securities
- Global Structured Finance Counterparty Methodology
- ESG Global Rating 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 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.
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. 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.
Maxim Berger, Director (Lead Analyst)
Scharon Gordon, Associate Director
Edward Napoli, Director
Melvin Zhou, Managing Director (Rating Committee Chair)
Business Development Contact
Arielle Smelkinson, Senior Director