KBRA Assigns Ratings to Cherry Securitization Trust 2024-1
2 Oct 2024 | New York
KBRA assigns ratings to four classes of notes issued by Cherry Securitization Trust 2024-1 ("CHRY 2024-1"), a consumer loan ABS transaction. The ratings reflect initial credit enhancement levels ranging from 27.51% for the Class A notes to 5.21% 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 inaugural 144A ABS securitization. CHRY 2024-1 issued four classes of notes totaling $400.0 million, which are collateralized by approximately $432.5 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 September 30, 2026, and (ii) the date on which an Amortization Event has occurred. Additionally, 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 October 2026.
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 24,000 unique merchants. Since inception, the Company has funded approximately $1.0 billion across 570,000 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 were reviewed prior to closing.
To access rating and relevant documents, click here.
Click here to view the report.