KBRA Assigns Preliminary Ratings to Marlette Funding Trust 2017-3

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Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by Marlette Funding Trust 2017-3 (MFT 2017-3). This is a $297.8 million consumer loan ABS transaction that is expected to close on October 26, 2017. This transaction represents the fifth securitization collateralized by unsecured consumer loans originated by Cross River Bank, under the Marlette Best Egg Platform and sold to Marlette Funding, LLC (“Marlette”) or its affiliate.

Founded in 2013 in Wilmington DE, Marlette operates an online marketplace lending platform, operating under the Best Egg brand (www.mybestegg.com) (the “Marlette Best Egg Platform” or the “Platform”). Approximately $300- $500 million of loans are originated through the Platform per quarter. Since March 2014, over $4.0 billion of loans have been originated though the Platform, and as of August 31, 2017, Marlette has approximately $98.3 million of loans on its balance sheet.

Marlette purchases and retains for its own balance sheet a portion of the loans originated through the Marlette Best Egg Platform. The Platform does not offer Peer-to-Peer funding, but instead partners exclusively with institutional investors for whole loan sales. All whole loan purchasers receive a random allocation of originations. Loan retention from Cross River Bank, loan purchases from Marlette and whole loan purchasers from institutional investors creates an alignment of interest among stakeholders. On the closing date, the depositor will acquire loans from six Loan Sellers who will contribute loans as collateral for MFT 2017-3.

The transaction has initial credit enhancement levels of 37.70% for the Class A Notes, 24.90% for the Class B Notes, 14.90% for the Class C Notes and 7.00% for the Class D Notes. Credit enhancement consists of overcollateralization, subordination (in the case of the Class A, Class B and Class C Notes) and a reserve account funded at closing.

KBRA applied its U.S. Consumer Loan ABS methodology for Asset-Backed Securities as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and the Avant Platform’s historical gross loss data. KBRA also conducted an operational assessment of the Avant Platform, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

Preliminary Ratings Assigned: Marlette Funding Trust 2017-3

Class     Preliminary Rating    

Expected Initial Class
Principal

A     AA (sf)     $196,005,000
B     A (sf)     $39,950,000
C     BBB (sf)     $31,211,000
D     BB (sf)     $24,657,000
       

Representations & Warranties Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.

Related Publications: (available at www.kbra.com)

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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Business Wire: 16:12 GMT Thursday 12th October 2017

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