KBRA Assigns Preliminary Ratings to Octane Receivables Trust 2022-1

NEW YORK–(BUSINESS WIRE)–KBRA assigns preliminary ratings to five classes of bonds issued by Octane Receivables Trust 2022-1 (“OCTL 2022-1”), an ABS powersports equipment loan transaction.

OCTL 2022-1 will issue five classes of notes (six tranches) totaling $275.0 million. The transaction is expected to be secured by approximately $279.0 million in fixed rate installment loans, made to preferred and non-preferred borrowers at the closing date. Preliminary ratings reflect initial levels of credit enhancement ranging from 27.20% for Class A Notes to 2.45% for Class E Notes.

Octane Lending, Inc. (“Octane” or the “Company”) offers direct consumer lending and indirect retail contracts through powersports and outdoor power equipment dealerships. Through its subsidiary, Roadrunner Financial, Inc. (“Roadrunner”), the Company began offering financing products in June 2016. Octane partners with over 40 original equipment manufacturer brands (“OEM”) and provides financing to customers who purchase Utility Vehicles (“UTVs”), All-Terrain Vehicles (“ATVs”), Cruisers, Sport Bikes, Personal Watercraft (“PWCs”), Lawnmowers, Dirt Bikes , golf carts, classic bicycles, trikes, scooters, snowmobiles, tractors and trailers. Octane’s customer base spans the full spectrum of credits and includes first-class debtors and second-class debtors. The company is headquartered in New York, New York and services loans through its indirect subsidiary, Roadrunner Account Services, LLC (“RAS”), located in Irving, Texas.

KBRA applied its general global rating methodology for asset-backed securities and its global ABS rating methodology for auto loans, as well as its global structured finance counterparty methodology and its global ESG rating methodology as part of its analysis of the underlying collateral pool of the transaction, the proposed capital structure, Octane’s historical static pool data, 2008 Powersports Credit Bureau performance data used by Octane to benchmark its performance and data static pool loss for comparable auto finance companies. KBRA reviewed its operational review of Octane, which was performed at its service center in Irving, Texas, as well as periodic update calls with the company. Operational agreements and legal opinions will be reviewed prior to closing.

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Disclosures

Further information on key credit considerations, sensitivity analyzes that consider factors that may affect these credit ratings and how they could lead to an upgrade or downgrade, and ESG factors (where they are a key factor in changing the credit rating or rating outlook) can be viewed in the full rating report mentioned above.

A description of all substantially significant sources that were used to prepare the credit rating and information on the methodology(ies) (including all significant models and sensitivity analyzes of the main relevant rating assumptions, the where applicable) used to determine the credit rating are available in the information disclosure form(s) located here.

Information on the meaning of each rating category can be found here.

Additional information relating to this rating metric is available in the information disclosure form(s) referenced above. Additional information regarding KBRA’s policies, methodologies, grading scales and disclosures is available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the United States Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a rating agency with the UK Financial Conduct Authority under the temporary registration scheme. In addition, KBRA is designated as the Designated Rating Agency by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.