Honor Finance’s 2016 asset-backed securitization has been downgraded for a second time by Kroll Bond Rating Agency due to cumulative net losses increasing to 31.2% compared with 29.4% over three collection periods, the rating agency reported April 25.
The now-defunct subprime lender’s Class B notes were downgraded to B+ from BB+, and its Class C notes were downgraded to C from CC. KBRA will continue to monitor the tranches for further downgrade.
KBRA previously downgraded the same two Honor Finance tranches on Jan. 25.
KBRA notes that the cumulative net loss rate is higher than expected due to high defaults, disruption from management turnover, and the transfer of servicing to Westlake Portfolio Management. The rating agency expects Class C notes to incur a $7 million to $8 million loss on $8.8 million of principal.
In addition, the securitization’s reserve account remains fully drawn.
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