Upstart Network seeks third ABS offer in less than a year
Upstart Network Inc., which recently filed for an initial public offering, is separately seeking to issue $ 80.7 million in asset-backed securities by early next year.
The ABS pool is made up of fully amortized, unsecured consumer installment loans issued by banks in New Jersey and Utah.
Upstart, a San Carlos, Calif., Company that offers an artificial intelligence-enhanced lending platform and partners with banks to generate credit, declined to comment on the loan offer.
The Upstart Pass-Through Trust Series 2021-ST1 transaction is structured as a single tranche rated BBB by DBRS Morningstar and is expected to close on January 21. The transaction is sponsored by the investment bank Jefferies, whose subsidiary JUPS has aggregated loans to be pooled. under the Master Trust created by Cross River Bank (CRB) in Fort Lee, NJ, and FinWise Bank (FinWise) in Murray, Utah.
These loans have terms of 36 and 60 months and although banks also issue 84-month loans, none were included in the current transaction, according to DBRS Morningstar.
The Upstart Securitization Trust transactions that closed earlier this year, one on October 30 for $ 270 million and another on February 20 for $ 375 million, were sponsored by Upstart and Goldman Sachs Asset Backed Securities Corp. FinWise, and Upstart is the repairer on all three transactions.
The overall credit enhancement on the ST1 operation is lower than that of the previous operations, at 33.25% against 39.75% for each of the others. ST1’s initial and target overcollateralisation (O / C) of 32.75% is significantly higher than the initial and target O / C of 14.25% for the October trade and 12.30% for the February trade.
According to Finsight, Upstart’s securitization in October was split into a $ 191 million Class A portion rated single-A by DBRS Morningstar and A- by Kroll Bond Rating Agency; a $ 31 million class B coin rated BBB and BBB- respectively by these agencies; and a $ 48 million Category C tranche that was not rated by DBRS Morningstar and rated BB- by Kroll. Price was not available on this 144A transaction.
Upstart issued its first consumer installment loan in 2014. DBRS Morningstar cautions in its report that prior to the pandemic-induced recession, Upstart’s consumer lending platform had not yet been tested by a slowdown in the credit cycle. “The performance of this particular type of consumer credit in a stressed economic environment has not yet been established,” the credit rating agency said.
Upstart filed a registration statement with the Securities and Exchange Commission for an IPO on November 5. It intends to list its common shares on the Nasdaq.