Market Overview

KBRA Assigns Preliminary Ratings to Conn's Receivables Funding 2018-A


Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three
classes of notes issued by Conn's Receivables Funding Series ("CONN
2018-A"). The transaction represents the sixth securitization since 2015
collateralized by a pool of retail installment sales contracts and
installment loans made to finance customer purchases of merchandise from
one of Conn's retail locations.

This is a $358.3 million ABS transaction and will include approximately
$421.5 million of receivables at closing. The transaction has initial
credit enhancement levels of 48.50% for the Class A Notes, 32.00% for
the Class B Notes, and 15.50% for the Class C Notes. Credit enhancement
consists of overcollateralization, excess spread, a reserve account
funded at closing, and, in the case of the Class A Notes and Class B
Notes, subordination of the junior class Notes.

Conn Appliances, Inc., a Texas corporation, is the sole direct
subsidiary of Conn's Inc., a publicly traded Delaware corporation.
Conn's has approximately 4,180 employees and operates 118 retail
locations in 14 different states as of June 30, 2018. Conn Appliances'
operates through two segments, retail and credit, and provides customers
the opportunity to purchase high-quality premium brand products across
four primary categories: furniture and mattresses, appliances,
electronics, and home office goods.

Conn's targets under-banked, subprime consumers that typically have
credit scores between 550 and 650 and have limited access to credit.
Their core customer demographic typically earns between $25,000 and
$60,000 in annual income, lives in densely populated neighborhoods, and
usually shops to replace older household goods with newer items. The
Company focuses on a high level of customer service driven by a trained
and motivated staff, quick delivery and installation, and product repair
or replacement services. By combining this high level of customer
service with unique retail and credit offerings, Conn's strategy is to
drive repeat transactions. Additionally, the Company's product selection
is focused on higher priced items that generate higher margins and
typically require some form of financing. In Q1 YTD FY 2019, Conn
Appliances and its subsidiaries financed, on average, approximately
70.0% of its retail sales under its in-house financing program.

KBRA analyzed the transaction using the Global Consumer Loan ABS Rating
Methodology published on November 28, 2017. KBRA's consumer loan
methodology incorporates an analysis of: (1) the underlying collateral
pool, (2) the originator's historical static pool data, segmented by
characteristics including credit quality and product type, (3) the
proposed capital structure for the transaction, (4) KBRA's operational
assessment of the originator and servicer and (5) the legal structure,
transaction documents, and legal opinions.

In applying the methodology, KBRA analyzed Conn's static pool data and
the underlying collateral pool. KBRA also conducted an on-site
operational review of Conn's at its servicing center in Beaumont, TX. In
addition, KBRA stressed the capital structure based on its stress case
cash flow assumptions. KBRA will review the operative agreements and
legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA's Pre-Sale Report, Conn's
Receivables Funding 2018-A
, which was published today at

Preliminary Ratings Assigned: Conn's Receivables Funding 2018-A

Class       Preliminary Rating       Expected Initial Class Principal
A       BBB- (sf)       $219,200,000
B       BB- (sf)       $69,550,000
C       B- (sf)       $69,550,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required,
pursuant to SEC Rule 17g-7, to provide a description of a transaction's
representations, warranties and enforcement mechanisms that are
available to investors when issuing credit ratings. KBRA's disclosure
for this transaction can be found in the report available here.

Related Publication: (available at


the iOS App


About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. 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, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

View Comments and Join the Discussion!