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KBRA Assigns Preliminary Ratings to Aqua Finance Trust 2017-AKroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of Aqua Finance Trust 2017-A ("Aqua 2017-A"), a consumer loan asset-backed securities transaction. This transaction represents the first public term securitization for Aqua Finance, Inc. ("Aqua" or the "Company") and its affiliates and is collateralized by a pool of retail installment sale contracts and agreements ("contracts") primarily used for water treatment equipment and home improvements. Aqua was founded in 1985, incorporated on January 15, 1988 and is an independent licensed consumer finance company operating in 49 states. The Company has five owners with its founder, President and Chief Executive Office, Robert Chadwell owning approximately 48.7%. As of September 30, 2017, Aqua services approximately 174,034 receivables it originated with an aggregate outstanding balance of $922.17 million. Since the financial crisis, Aqua has been originating to more creditworthy borrowers as evidenced by an increase in the average FICO score of the portfolio from approximately 650 during the financial crisis to approximately 700 currently. Aqua acquires both closed-end and open-ended simple interest retail contracts from dealers who originate the consumer receivables by providing point-of-sale financing to the consumer. These products include water treatment systems and home improvement projects such as roofing, window/door replacement, heating, ventilation and air conditioning ("HVAC"), kitchen and bathroom renovations, siding and recreational products (pools, spas and saunas) and marine (boats, motorcycles, campers, recreational vehicles). Marine products are not included in this securitization. The Company finances mostly "purchased" products and some "sold" products. Purchased products involve the customer contacting or seeking a dealer to help them with a need or concern (home improvement contractors, Culligan Water, plumbers and HVAC). Sold products involve the dealer sourcing and soliciting the customer to consider their products and selling them on the benefits thereof. The transaction has initial credit enhancement levels of 13.25% for the Class A Notes, 5.25% for the Class B Notes and 3.50% for the Class C Notes. Credit enhancement consists of overcollateralization, subordination of the junior note classes, a cash reserve fund funded at closing, and excess spread. KBRA applied its U.S. Consumer Loan ABS (News - Alert) Rating Methodology for Asset-Backed Securities as part of its analysis of the transaction's underlying collateral pool, the proposed capital structure and Aqua's historical gross loss data. KBRA also conducted an operational assessment of Aqua, 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: Aqua Finance Trust 2017-A
Representations & Warranties Disclosure All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC (News - Alert) 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 entitled Aqua Finance Trust 2017-A Representations and Warranties Disclosure. Related Publications: (available at www.kbra.com) CONNECT WITH KBRA
Twitter 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). View source version on businesswire.com: http://www.businesswire.com/news/home/20171106006503/en/ |
