KBRA Assigns Preliminary Ratings to Cherry Securitization Trust 2025-1
8 May 2025 | New York
KBRA assigns preliminary ratings to four classes of notes issued by Cherry Securitization Trust 2025-1 ("CHRY 2025-1"), a consumer loan retail installment contract ABS transaction. The preliminary ratings reflect initial credit enhancement levels ranging from 23.37% for the Class A notes to 3.62% for the Class D notes. Credit enhancement on the notes is comprised of overcollateralization, subordination of junior note classes (except for the Class D notes), a cash reserve account funded at closing, and excess spread.
This transaction represents Cherry’s second overall 144A ABS securitization, and the first of 2025. CHRY 2025-1 will issue four classes of notes totaling $300.0 million, which are collateralized by approximately $324.9 million of Receivables used for elective medical procedures. The transaction features a 24-month revolving period (the “Revolving Period”), which will end on the earlier of (i) prior to the close of business on April 30, 2027, and (ii) the date on which an Amortization Event has occurred. During the Revolving Period, the Seller will transfer additional Receivables to the Issuer, who will purchase such additional Receivables so long as (a) the Issuer and the Receivables satisfy all conditions set forth in the transaction documents and (b) an Amortization Event has not occurred. The transaction features an Optional Redemption, whereby the Certificateholders holding 100% of the Certificates have the right to redeem the Notes, in whole but not in part, on any Monthly Payment Date on and after the Monthly Payment Date in May 2027.
Founded in 2017 as Mason Finance, and rebranded to Cherry Technologies, Inc. (“Cherry” or the “Company”) in 2019, Cherry operates a digital platform (the “Cherry Platform”) that facilitates point-of-sale unsecured consumer loans and retail installment sale contracts to finance elective medical services to primarily prime borrowers through a network of over 39,000 unique merchants. Since inception, the Company has funded approximately $2.0 billion across 990,000 transactions. Cherry currently offers financing in all 50 states and the District of Columbia through its banking partners via the Cherry Platform.
KBRA applied its Consumer Loan ABS Global Rating Methodology, 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, the proposed capital structure, and Cherry's historical static pool data. KBRA considered its operational review of the Company. Operative agreements and legal opinions will be reviewed prior to closing.
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