NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency, LLC (KBRA) assigns preliminary ratings to three classes of notes issued by Foundation Finance Trust 2020-1 (“FFIN 2020-1”), an asset-backed securitization collateralized by approximately $250 million of unsecured consumer loans primarily used for home improvements. The preliminary ratings reflect the initial credit enhancement levels ranging from 25.45% for the Class A notes to 10.50% for the Class C notes.

The impact of COVID-19 has resulted in rising unemployment, which can adversely impact the performance of the transaction and consumer loans in general. Owing to KBRA’s expectations of high and rising unemployment, KBRA increased its base case default assumptions for the subject pool in a manner that was consistent with a recent portfolio review of the unsecured consumer loan sector noted in the following report: U.S. Unsecured Consumer ABS Securities on Watch Report. The review resulted with the Foundation Finance Trust 2017-1 Class B and 2019-1 Class A notes placed on Watch Developing; and 2016-1 Class B, 2017-1 Class C, and 2019-1 Class B and C notes placed on Watch Downgrade.

Foundation Finance Company (“Foundation”) was founded in 2012 through the partnership of an experienced management team and Garrison Investment Group (“Garrison”). Foundation is approximately 99% owned by Garrison, a leading middle-market credit and asset-based investment management firm with approximately $2.7 billion in assets under management as of March 31, 2020.

KBRA applied its Global Consumer Loan ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Foundation, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

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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 U.S. Information Disclosure Form 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 U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. 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 and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.



Melvin Zhou, Senior Director (Lead Analyst)

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