KBRA assigns preliminary ratings to four classes of notes issued by FHF Trust 2023-1 (“FHF 2023-1”), a subprime auto loan asset-backed securities transaction.

FHF 2023-1 will issue four classes of notes totaling $304,943,000. The transaction has initial hard credit enhancement levels ranging from 27.00% for the Class A-1 and Class A-2 notes to 7.65% for the Class C notes. Credit enhancement is comprised of overcollateralization, subordination of junior note classes (except for the Class C notes), a cash reserve account and excess spread. As of the February 28, 2023 statistical calculation date, the loans have a non-zero weighted average FICO score of 673 and approximately 48.41% of the borrowers (by current principal balance) do not have a credit score. The loans have an average current balance of $33,031, a weighted average interest rate of 18.59% and weighted average original and remaining terms of 69 and 66 months, respectively.

This transaction is the first rated ABS securitization in 2023 for First Help Financial, LLC (“FHF” or the “Company”) and the sixth subprime auto loan ABS securitization for the Company since 2019. FHF 2023-1 represents the Company’s second ABS aligned with the 2021 Social Bond Principles administered by the International Capital Market Association (“ICMA”).

Headquartered in Needham, MA, FHF is a subprime auto finance company that was founded in 2006 and currently offers loans in 28 states. FHF is an indirect auto lender and purchases receivables from franchise and independent dealers. FHF serves consumers who are typically unable to obtain financing from traditional lending sources such as credit unions, banks, and captive auto finance companies.

KBRA applied its 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 and FHF’s historical static pool data. KBRA considered its operational review of FHF as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.

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Related Publications

• Auto Loan ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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