Morningstar DBRS Assigns Provisional Credit Ratings to OneMain Direct Auto Receivables Trust 2025-1

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of notes to be issued by OneMain Direct Auto Receivables Trust 2025-1 (ODART 2025-1 or the Issuer):

-- $361,200,000 Class A Notes at (P) AAA (sf)
-- $54,240,000 Class B Notes at (P) AAA (sf)
-- $38,310,000 Class C Notes at (P) A (high) (sf)
-- $46,250,000 Class D Notes at (P) BBB (high) (sf)

CREDIT RATING RATIONALE/DESCRIPTION
The provisional ratings are based on Morningstar DBRS' review of the following analytical considerations:
-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary "Baseline Macroeconomic Scenarios for Rated Sovereigns December 2024 Update," published on December 19, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.
-- The Morningstar DBRS cumulative net loss (CNL) base-case assumption is 6.86%, based on the worst-case loss pool constructed giving consideration to the concentration limits present in the structure.
-- Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization, subordination, amounts held in the reserve fund, and excess spread. Credit enhancement levels are sufficient to support Morningstar DBRS' projected expected CNL assumption under various stress scenarios.
-- 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 payment of timely interest on a monthly basis and principal by the legal final maturity date.
-- OneMain Finance Corporation's (OneMain) capabilities with regard to originations, underwriting, and servicing.
-- Morningstar DBRS performed an operational review of OneMain and considers the entity an acceptable originator of auto loans.
-- Morningstar DBRS considers OneMain an acceptable servicer of auto loans.
-- There is no backup servicer for the ODART 2025-1 transaction; however, HSBC Bank U.S.A., National Association will serve as the Indenture Trustee.
-- OneMain's senior management team has considerable experience and a successful track record within the consumer loan industry.
-- Direct auto receivables are generated through approximately 1,300 OneMain branches. Branch collections have significantly decreased over the past few years as a larger portion of the portfolio has transitioned to electronic payment options. This trend could be reversed during the five-year revolving period, but the Company has stated its intention to continue to give obligors options for repaying their loans. As of June 2019, OneMain ceased accepting payments in cash at OneMain branches.
-- OneMain's relationship-driven business model includes early-stage collections that are handled at the branches, while late-stage collections are performed at centralized servicing centers.
-- The Company began making direct auto loans in 2014. For the ODART 2025-1 transaction, Morningstar DBRS has relied exclusively on the historical data provided by the sponsor.
-- In 2024, OneMain acquired all the outstanding common stock of Foursight Capital LLC from Jefferies Financial Group, Inc. Morningstar DBRS considers OneMain an acceptable servicer of OneMain Foursight Loans.
-- The legal structure and presence of legal opinions that address the true sale of the assets from the Originators to the Depositor, the nonconsolidation of the special-purpose vehicle with OneMain, that the trust has a valid first-priority security interest in the assets, and consistency with Morningstar DBRS' "Legal Criteria for U.S. Structured Finance."

Morningstar DBRS' credit ratings on the Class A, Class B, Class C, and Class D Notes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for each of the rated notes are the related accrued note interest and the related note balance.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the associated contractual payment obligation that is not a financial obligation is the interest on unpaid accrued note interest for each of the rated notes.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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

The principal methodology applicable to the credit ratings is Rating U.S. Retail Auto Loan Securitizations (August 6, 2024), https://dbrs.morningstar.com/research/437569.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- Operational Risk Assessment for U.S. ABS Originators and Servicers (December 5, 2024),
https://dbrs.morningstar.com/research/444162

-- Rating U.S. Structured Finance Transactions (November 18, 2024), 
https://dbrs.morningstar.com/research/443136

-- Legal Criteria for U.S. Structured Finance (December 3, 2024), 
https://dbrs.morningstar.com/research/444064

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.