KBRA Maintains Watch Developing Placement on LendingPoint Pass-Through Trusts
14 Oct 2024 | New York
KBRA maintains its Watch Developing Placement on four classes of notes from four LendingPoint Pass-Through Trust (“LPPT”) securitizations. The ratings were previously placed on Watch Developing on July 16, 2024, due to a change in the treatment of obligors subject to debt settlement agreements which resulted in a decrease in overcollateralization (“O/C”).
The table below displays the current capital structures and Watch Placements undertaken in this review. To date, the securities have received timely interest payments.
The LPPT transactions do not have a reserve account and O/C does not build unless the cumulative net loss ratio amortization event is breached. If the cumulative net loss rate is above the threshold or an Event of Default occurs, all excess cash after paying fees, expenses and Class A interest and principal are applied to pay down the Class A notes and build O/C. If the trigger is subsequently cured, the current O/C level will be the new target O/C. All four of the LPPT transactions are in breach of the cumulative net loss ratio amortization event trigger, and KBRA does not anticipate any of the triggers to be cured.
Following the Watch Placements in July 2024, the performance for July 2024 through September 2024 distribution dates have generally showed O/C returning towards the prior target levels, however the current O/C levels are below the highest level for the respective transaction to date. KBRA will continue to monitor the transactions as well as Company performance and seek to resolve the Watch Placement over the next 90 days.