Octane Lending is sponsoring another round of asset-backed securities (ABS) financing, in a $300 million transaction called Octane Receivables Trust, 2022-2, secured by direct consumer loans and contracts indirect retail sales on motorsports and outdoor power equipment.

Installment loans are secured by $317 million of fixed rate installment loans to prime and lower quality borrowers. Octane is emerging from a period of operational problems. It generated a net loss of around $22 million for the five months ended May 31, according to a pre-sale report from ratings agency Kroll Bond.

ABS and warehouse financing costs increased over the same five-month period for Octane. In addition, to date in 2022, Octane has not sold any securitization residuals and therefore has not recognized any gain on the sale of such assets, unlike 2021. Just as other operational issues have impacted Octane Lending. Specifically, supply chain constraints and inventory levels have reduced original equipment manufacturer (OEM) costs.

The transaction, known as OCTL 2022-2, has an average current loan balance of $12,954, down from $12,663, and a loan concentration in Octane’s core risk tiers of 66.8% , similar to the previous transaction.

On a weighted average (WA) basis, OCTL 2022-2 has an APR of 12.4%, a FICO score of 698, and a loan-to-value ratio of 116.9%. The current transaction also has a higher concentration of used vehicles, 32%, compared to the previous ratio of 31%.

OCTL 2022-2 will pay ticket holders sequentially across four ticket categories. KBRA Plans to Assign “AAA” Ratings to $226.4 Million Class A Notes; “AA” on $27.8 million, Class B; “A” on $18 million Class C notes and “BBB” on $27.5 million Class D notes.

The transaction benefits from a subordination, a cash reserve account equivalent to 1.0% of the initial balance of the pool and an initial overcollateralization of 5.3%, to reach a target of 6.4% of the balance initial of the pool. An excess spread is also built into the deal, at around 4.1%.
Octane Lending is sponsoring another round of asset-backed securities (ABS) financing, in a $300 million transaction called Octane Receivables Trust, 2022-2, secured by direct consumer loans and contracts indirect retail sales on motorsports and outdoor power equipment.

Installment loans are secured by $317 million of fixed rate installment loans to prime and lower quality borrowers. Octane is emerging from a period of operational problems. It generated a net loss of around $22 million for the five months ended May 31, according to a pre-sale report from ratings agency Kroll Bond.

ABS and warehouse financing costs increased over the same five-month period for Octane. In addition, to date in 2022, Octane has not sold any securitization residuals and therefore has not recognized any gain on the sale of such assets, unlike 2021. Just as other operational issues have impacted Octane Lending. Specifically, supply chain constraints and inventory levels have reduced original equipment manufacturer (OEM) costs.

The transaction, known as OCTL 2022-2, has an average current loan balance of $12,954, down from $12,663, and a loan concentration in Octane’s core risk tiers of 66.8% , similar to the previous transaction.

On a weighted average (WA) basis, OCTL 2022-2 has an APR of 12.4%, a FICO score of 698, and a loan-to-value ratio of 116.9%. The current transaction also has a higher concentration of used vehicles, 32%, compared to the previous ratio of 31%.

OCTL 2022-2 will pay ticket holders sequentially across four ticket categories. KBRA Plans to Assign “AAA” Ratings to $226.4 Million Class A Notes; “AA” on $27.8 million, Class B; “A” on $18 million Class C notes and “BBB” on $27.5 million Class D notes.

The transaction benefits from a subordination, a cash reserve account equivalent to 1.0% of the initial balance of the pool and an initial overcollateralization of 5.3%, to reach a target of 6.4% of the balance initial of the pool. An excess spread is also built into the deal, at around 4.1%.