KBRA Assigns Preliminary Ratings to US Claims LFS Securitization 2023-A

KBRA assigns preliminary ratings to three classes of notes issued by US Claims LFS Securitization, Series 2023-A (LFS 2023A), a litigation finance ABS. LFS 2023A represents the ninth ABS collateralized by litigation finance receivables to be sponsored by US Claims Holdings, LLC (US Claims or the Company). US Claims, originally established in 1996 and acquired in 2014 by Blackstone Tactical Opportunities as a subsidiary of Majestic Financial Holdings, LLC, is a leading provider of non-recourse advances to plaintiffs and attorneys with pending legal settlements across a variety of case types. Through its strategy of keeping “Litigation Funding Simplified”, the Company has funded over $800 million of litigation finance since 2010. The Company has 100 full-time employees across its headquarters in Delray Beach, FL and support offices in Clearwater, FL and Moorestown, NJ.

LFS 2023A will issue three classes of notes (Notes). The Notes benefit from credit enhancement in the form of overcollateralization and, for the Class A and B notes, a cash reserve account and subordination. The portfolio securing the Notes has a net advance amount of approximately $126.01 million and an aggregate discounted projected receivable balance (ADPB) of approximately $164.99 million, including assumed prefunding, as of April 26, 2023 (Cutoff Date) based on the illustrative discount rate of 7.96%. The ADPB is the aggregate discounted collections associated with USC LFS 2023-A’s litigation receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the weighted average anticipated interest rate on the Notes, the servicing fee rate of 0.50%, and an additional 0.10%. As of the Cutoff Date, the total net advances are made up primarily of plaintiff advances (97.97%) and pre-settlement advances (98.12%). The average advance to expected case settlement value is 13.53%. The transaction also features a $22.8 million prefunding account that is funded through the note issuance and may be used to purchase additional eligible receivables during the month after closing.

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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.

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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.

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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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