KBRA Assigns Ratings to PEAR 2024-1, LLC
15 Feb 2024 | New York
KBRA assigns ratings to three classes of notes issued by PEAR 2024-1, LLC (PEAR 2024-1), a securitization collateralized by litigation finance receivables and medical receivables.
PEAR 2024-1 represents Golden Pear Funding OpCo, LLC’s (Golden Pear or the Company) fifth litigation finance ABS. Golden Pear is a litigation finance company that conducts business throughout the U.S. but is concentrated primarily in the New York area. As of January 2024, the Company, including originations of predecessor company Golden Pear Funding, LLC, has funded over $1 billion in aggregate advances dating back to its founding in 2008.
PEAR 2024-1 will issue three classes of notes. The notes benefit from credit enhancement in the form of overcollateralization, a cash reserve account and, to the extent that the overcollateralization trigger is in effect, subordination for senior classes. The portfolio securing the transaction has an aggregate discounted projected balance of the receivables (ADPB) of approximately $83.39 million as of January 10, 2024 (Cutoff Date), based on the discount rate of 8.237%. The ADPB is the aggregate discounted cash flows of the collections associated with the PEAR 2024-1 portfolio’s litigation funding receivables (Litigation Receivables) and medical receivables (Medical Receivables and, collectively, Receivables). The discount rate used to calculate the ADPB is a percentage equal to the sum of the weighted average interest rate on the notes, the servicing fee rate of 1.00%, and an additional 0.10%. The outstanding principal balance as of the Cutoff Date is $67.65 million (Cutoff Date Principal). Litigation Receivables comprise 93.88% of the Cutoff Date Principal and have an average advance to expected case worth ratio (Expected Case Worth Ratio) of 14.37%. Medical Receivables comprise the remaining 6.12% of the Cutoff Date Principal and have an Expected Case Worth Ratio of 16.97%. The transaction also features a $25 million prefunding account that is funded through the note issuance and may be used to purchase additional eligible Litigation Receivables during the month after closing (Funding Period).
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