DBRS Morningstar Finalizes Provisional Ratings on ACHV ABS Trust 2023-3PL

DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes issued by ACHV ABS Trust 2023-3PL (ACHV 2023-3PL) as follows:

-- $87,570,000 Class A Notes at AAA (sf)
-- $59,230,000 Class B Notes at AA (low) (sf)
-- $27,690,000 Class C Notes at A (sf)

CREDIT RATING RATIONALE/DESCRIPTION
(1) The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios for Rated Sovereigns: June 2023 Update, published on June 30, 2023. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

(2) The DBRS Morningstar CNL assumption is 14.60% based on the Cutoff Date pool composition.

(3) The transaction’s form and sufficiency of available credit enhancement.
-- Subordination, overcollateralization, amounts held in the Reserve Fund, and excess spread create credit enhancement levels that are commensurate with the ratings.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf), AA (low) (sf) and A (sf) stress scenarios in accordance with the terms of the ACHV ABS TRUST 2023-3PL transaction documents.

(4) The experience, sourcing, and servicing capabilities of Freedom Financial Asset Management, LLC (FFAM), doing business as Achieve Personal Loans. (Beginning December 2022, FFAM is also known as Achieve Personal Loans, and the Freedom Plus (F+) loan product is called the Achieve Personal Loan.)

(5) The experience, underwriting, and origination capabilities of Cross River Bank (CRB) and Pathward, National Association (Pathward) (together, the Partner Banks).

(6) The ability of Wilmington Trust National Association to perform duties as a Backup Servicer and the ability of Nelnet Servicing, LLC to perform duties as a Backup Servicer Subcontractor.

(7) The annual percentage rate (APR) charged on the loans and the status of the Partner Banks as the true lenders.
-- All loans included in ACHV ABS TRUST 2023-3PL are originated by CRB, a New Jersey state-chartered FDIC-insured bank or Pathward (formerly MetaBank), a national bank.
-- Loans originated by CRB are all within the New Jersey state usury limit of 30.00%.
-- Loans originated by Pathward are within the South Dakota state usury limit of 36.00%.
-- The weighted-average APR of the loans in the pool is 23.83%.
-- Loans may be in excess of individual state usury laws; however, the Partner Banks as the true lenders are able to export rates that preempt state usury rate caps.
-- Loans originated to borrowers in Connecticut, Vermont, Colorado, West Virginia, and Maine are excluded from the pool.
-- Under the Loan Sale Agreement, FFAM is obligated to repurchase any loan if there is a breach of representation and warranty that materially and adversely affects the interests of the purchaser.

(8) The legal structure and legal opinions that address the true sale of the personal loans, the nonconsolidation of the trust, and that the trust has a valid perfected security interest in the assets and consistency with the DBRS Morningstar “Legal Criteria for U.S. Structured Finance.”

DBRS Morningstar’s credit rating on the securities listed above addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents.

DBRS Morningstar’s credit rating does not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations.

DBRS Morningstar’s long-term credit ratings provide opinions on risk of default. DBRS Morningstar 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. The DBRS Morningstar short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

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

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (July 4, 2023; https://www.dbrsmorningstar.com/research/416784/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings).

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

The principal methodology applicable to the credit rating is Rating U.S. Structured Finance Transactions (February 6, 2023; https://www.dbrsmorningstar.com/research/409449/rating-us-structured-finance-transactions).

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

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

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.

DBRS Morningstar 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.

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

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

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

Operational Risk Assessment for U.S. ABS Servicers (July 20, 2023)
https://www.dbrsmorningstar.com/research/417415/operational-risk-assessment-for-us-abs-servicers

Operational Risk Assessment for U.S. ABS Originators (July 20, 2022)
https://www.dbrsmorningstar.com/research/417416/operational-risk-assessment-for-us-abs-originators

Legal Criteria for U.S. Structured Finance (December 7, 2022) https://www.dbrsmorningstar.com/research/407008/legal-criteria-for-us-structured-finance

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.