Octane completes $326M asset-backed securitization
Octane has closed a $326 million securitization (“OCTL 2024-3“) collateralized by fixed-rate installment powersports loans issued through its in-house lender, Roadrunner Financial, Inc. Octane has issued more than $4 billion of asset-backed securities (ABS) since launching the program in December 2019. This is the company’s 12th ABS transaction.
OCTL 2024-3 consists of six classes of fixed-rate notes: Class A-1, Class A-2, Class B, Class C, Class D and Class E, which Standard & Poor’s (S&P)* and Kroll Bond Rating Agency (KBRA)** rated as A-1+/K1+, AAA/AAA, AA/AA+, A/A+, BBB/BBB+ and BB/BB+ respectively, in a private offering pursuant to Rule 144A under the Securities Act of 1933, as amended.
J.P. Morgan Securities acted as lead manager and structuring agent, with Atlas SP Securities, Mizuho and Truist Securities serving as joint bookrunners. In this latest ABS transaction, Octane continued to diversify its investor base while maintaining the support of existing institutional investors.
“Thanks to the support of our esteemed institutional investors, Octane reached a significant milestone with this transaction – issuing over $4 billion of asset-backed securities in less than five years,” says Steven Fernald, president and chief financial officer at Octane. “We were pleased to see such high demand for our paper among both new and existing partners, which allowed our syndicate of banks to reduce credit spreads materially from their initial guidance through final pricing to our lowest levels since 2021. Our robust capital markets execution gives us even greater flexibility as we continue to grow our business while maintaining strong credit performance.”
In addition to completing two other asset-backed securitizations, OCTL 2024-1 and OCTL 2024-2, Octane has diversified its capital markets strategy in 2024. Notable transactions include a $500 million forward-flow deal with funds managed by AB CarVal, two separate whole loan sales totaling $280 million to Yieldstreet, an evergreen forward flow transaction with a credit union, and a $200 million whole loan sale to funds managed by AB CarVal.
The ABS transaction announced today follows several significant milestones for the company. Octane recently entered the marine market, launched RideNowFinance, a private label partnership with the largest powersports retailer in North America, and surpassed $5B in aggregate originations. Earlier this year, Octane completed its Series E funding round.
*The full analysis for S&P’s ratings, including any updates is available on spglobal.com.
**KBRA’s ratings are subject to all of the terms and conditions set forth in the related report. Visit KBRA’s website to learn more.
