DBRS Finalizes Provisional Ratings on OneMain Financial Issuance Trust 2018-2

DBRS, Inc. (DBRS) finalized its provisional ratings on the following classes of notes issued by OneMain Financial Issuance Trust 2018-2 (OMFIT 2018-2 or the Issuer):

-- $255,390,000 Series 2018-2, Class A (the Class A Notes) at AAA (sf)
-- $33,120,000 Series 2018-2, Class B (the Class B Notes) at AA (sf)
-- $21,310,000 Series 2018-2, Class C (the Class C Notes) at A (sf)
-- $26,460,000 Series 2018-2, Class D (the Class D Notes) at BBB (sf)
-- $32,160,000 Series 2018-2, Class E (the Class E Notes) at BB (sf)

The ratings are based on DBRS’s review of the following analytical considerations:

-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the ratings address the timely payment of interest on a monthly basis and principal by the legal final maturity date.
-- OneMain Financial, Inc.’s (OneMain) capabilities with regard to originations, underwriting and servicing.
-- The credit quality of the collateral and performance of OneMain’s consumer loan portfolio. DBRS used a hybrid approach in analyzing the OneMain portfolio that incorporates elements of static pool analysis, employed for assets such as consumer loans, and revolving asset analysis, employed for such assets as credit card master trusts.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with OneMain, that the trust has a valid first-priority security interest in the assets and the consistency with DBRS’s “Legal Criteria for U.S. Structured Finance.”

DBRS assigned ratings to OMFIT 2018-2 as listed above. The OMFIT 2018-2 transaction represents the 11th securitization of a portfolio of non-prime and subprime personal loans originated through OneMain’s branch network.

Credit enhancement in the transaction consists of overcollateralization (OC), subordination, excess spread and a Reserve Account. The rating on the Class A Notes reflects the 33.40% of initial hard credit enhancement provided by the subordinated notes in the pool, the Reserve Account (0.50%) and OC (3.20%). The rating on the Class B Notes reflects the 24.70% of initial hard credit enhancement provided by the subordinated notes in the pool, the Reserve Account (0.50%) and OC (3.20%). The rating on the Class C Notes reflects the 19.10% of initial hard credit enhancement provided by the subordinated notes in the pool, the Reserve Account (0.50%) and OC (3.20%). The rating on the Class D Notes reflects the 12.15% of initial hard credit enhancement provided by the subordinated notes in the pool, the Reserve Account (0.50%) and OC (3.20%). The rating on the Class E Notes reflects the 3.70% of initial hard credit enhancement provided by the Reserve Account (0.50%) and OC (3.20%). Additional credit support may be provided from excess spread available in the structure.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Structured Finance Transactions, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.