Fitch Rates Lendmark Funding Trust 2016-A

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns ratings to Lendmark Funding Trust 2016-A (LFT 2016-A) as follows:--$130,480,000 class A notes 'BBB+sf'; Outlook Stable;--$32,200,000 class B notes 'BBsf'; Outlook Stable;--$15,042,000 class C notes 'Bsf'; Outlook Stable.

KEY RATING DRIVERS

Adequate Collateral Quality: The LFT 2016-A collateral pool comprises secured and unsecured fixed rate personal loans and sales finance contracts originated by the company based on its underwriting guidelines (see Appendix A). The portfolio will also include renewed loans that will replace or refinance the existing loan. Additional eligible loans will be added to the portfolio during the revolving period ending Jan. 31, 2018.

Sufficient Credit Enhancement: Credit enhancement (CE) is provided by overcollateralization (OC) and excess spread. The initial OC of approximately $22.6 million will be maintained for the life of the transaction. Additionally, the class A notes will benefit from subordination provided by the class B and C notes, and the class B notes will benefit from subordination provided by the class C notes. In addition, trust performance and other triggers based on credit and servicing risks are used to provide additional protection for investors should loan performance or certain counterparties' financial conditions deteriorate (each an early amortization event). When an early amortization event occurs, the revolving period will end and note amortization will begin.

Adequate Liquidity Support: A reserve account sized at $2 million which equals 1% of the initial pool balance with a floor at 1% of the initial pool balance, will be funded at closing.

Acceptable Servicing Capabilities: Lendmark Financial Services LLC. (Lendmark) will service 100% of the portfolio. Wells Fargo Bank N.A. (Wells Fargo) is the back-up servicer and image file custodian. Fitch considers all parties acceptable servicers. Wells Fargo in its capacity of image file custodian will retain electronic copies of all imaged files of each loan.

RATING SENSITIVITIES

As Fitch's base case default proxy is derived primarily from historical collateral performance, actual performance may differ from the expected performance, resulting in higher loss levels than the base case. This will result in a decline in available CE, and the remaining loss coverage levels available to the notes and may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in the coverage. Rating sensitivity results should only be considered as one potential outcome, given that the transaction is exposed to multiple dynamic risk factors. Rating sensitivity should not be used as an indicator of future rating performance.

Holding all other inputs constant, a 15% increase in base case defaults resulted in a downgrade of at least three rating notches for the notes.

DUE DILIGENCE USAGE

Fitch was provided with due diligence information from KPMG LLP. The third-party due diligence focused on comparing the sample characteristics provided in the data file of 47,103 consumer loans to the corresponding information in the loan agreements. Fitch considered this information in its analysis, and the findings did not have any impact on the analysis. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary.

Additional information is available at www.fitchratings.com.

Applicable CriteriaCounterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781Global Consumer ABS Rating Criteria (pub. 03 Dec 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874105Global Structured Finance Rating Criteria (pub. 06 Jul 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Related ResearchLendmark Funding Trust 2016-A -- Appendixhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871607

Additional DisclosuresDodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1000627ABS Due Diligence Form 15E 1https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=1000627&flm_nm=15e_1000627_1.pdfSolicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1000627Endorsement Policyhttps://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160308006758/en/

Fitch Ratings
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or
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Source: Fitch Ratings

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