DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes (collectively, the Notes) to be issued by OneMain Financial Issuance Trust 2019-2 (OMFIT 2019-2 or the Issuer):
-- $434,210,000 Series 2019-2, Class A at AAA (sf)
-- $60,950,000 Series 2019-2, Class B at AAA (sf)
-- $39,470,000 Series 2019-2, Class C at AA (sf)
-- $65,370,000 Series 2019-2, Class D at BBB (high) (sf)
The provisional ratings are based on DBRS’s review of the following analytical considerations:
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the ratings address the timely payment of interest on a monthly basis and principal by the legal final maturity date.
-- OneMain Financial, Inc.’s (OneMain) capabilities with regard to originations, underwriting and servicing.
-- The credit quality of the collateral and performance of OneMain’s consumer loan portfolio. DBRS used a hybrid approach in analyzing the OneMain portfolio that incorporates elements of static pool analysis, employed for such assets as consumer loans, and revolving asset analysis, employed for such assets as credit card master trusts.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with OneMain, that the trust has a valid first-priority security interest in the assets and the consistency with DBRS’s “Legal Criteria for U.S. Structured Finance.”
The OMFIT 2019-2 transaction represents the 14th securitization of a portfolio of non-prime and subprime personal loans originated through OneMain’s branch network.
Credit enhancement in the transaction consists of overcollateralization (OC), subordination, excess spread and a reserve account. The initial amount of OC is 5.00% of the aggregate loan principal balance. The subordination in the transaction refers to the Class B, Class C and Class D notes, which are subordinated to the Class A notes. The reserve account is 0.50% of the initial note balance. Following the Closing Date, the reserve account will be an amount equal to the greater of 0.50% of the aggregate Initial Note Balance and a floor of $250,000. Initial Class A credit enhancement of 31.75% includes a 0.50% reserve account, OC of 5.00% and 26.25% subordination. Initial Class B credit enhancement of 22.10% includes a 0.50% reserve account, OC of 5.00% and 16.60% subordination. Initial Class C credit enhancement of 15.85% includes a 0.50% reserve account, OC of 5.00% and 10.35% subordination. Initial Class D credit enhancement of 5.50% includes a 0.50% reserve account and OC of 5.00%. Interest on the Notes is payable monthly at a fixed rate.
All figures are in U.S. dollars unless otherwise noted.
The principal methodologies are Rating U.S. Structured Finance Transactions and Rating U.S. Credit Card Asset-Backed Securities, which can be found on dbrs.com under Methodologies & Criteria.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.
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