Kroll Bond Rating Agency assigned preliminary ratings to four classes of notes issued by Octane Receivables Trust 2022-2 (OCTL 2022-2), a powersports equipment loan ABS transaction. OCTL 2022-2 will issue four classes of notes totaling $300 million.

The transaction is expected to be collateralized by approximately $317 million of fixed rate installment loans made to prime and non-prime borrowers as of the closing date. The preliminary ratings reflect initial credit enhancement levels, ranging from 29.55% for the Class A notes to 6.35% for the Class D notes.

Octane Lending originates direct consumer loans and indirect consumer retail installment contracts through powersports and outdoor power equipment dealerships. Through its subsidiary, Roadrunner Financial, the company began offering financing products in June 2016. Octane partners with more than 40 original equipment manufacturer brands (OEMs) and provides financing to customers purchasing utility task vehicles (UTVs), all-terrain vehicles (ATVs), cruisers, sports bikes, personal watercraft (PWC), mowers, dirt bikes, golf carts, classic bikes, trikes, scooters, snowmobiles, tractors and trailers. Octane’s customer demographic includes prime and non-prime obligors. The company is headquartered in New York and services loans through its indirect subsidiary, Roadrunner Account Services, located in Irving, TX.

KBRA applied its general global rating methodology for ABS and auto loan ABS global rating methodology, as well as its global structured finance counterparty methodology and ESG global rating methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure, Octane’s historical static pool data, 2008 powersport credit bureau performance data used by Octane to benchmark its performance and static pool loss data for comparable automobile finance companies. KBRA considered its operational review of Octane, which was conducted at its Irving, TX, servicing center, as well as periodic update calls with the company. Operative agreements and legal opinions will be reviewed prior to closing.