KBRA assigned preliminary ratings to seven classes of notes issued by the Research‑Driven Pagaya Motor Asset Trust 2025‑6 (RPM 2025‑6), a transaction that will raise $399.20 million in total. The ratings cover classes A‑1 through E, with the highest class receiving an 89.26 % over‑collateralization and the lowest class an 1.86 % enhancement, achieved through a mix of over‑collateralization, subordination, a cash reserve account, and excess spread.
The transaction is fully prefunded; no collateral is funded at closing. Instead, the notes are supported by amounts deposited in a prefunding account, a structure that provides immediate liquidity for Pagaya’s auto‑loan origination and servicing activities while preserving the trust’s credit profile.
Pagaya’s AI‑driven underwriting platform has enabled the company to generate a pipeline of securitizable auto‑loan assets. By issuing this ABS, Pagaya diversifies its funding sources and improves capital efficiency, freeing balance‑sheet capacity to originate additional loans. The move aligns with the company’s broader strategy to expand its auto‑lending portfolio and capture higher‑margin asset classes.
CFO Evangelos Perros noted that the issuance “diversifies our funding infrastructure and bolsters our growth and capital efficiency.” He added that the auto‑lending space remains a key growth area, underscoring the strategic importance of the ABS to Pagaya’s long‑term capital strategy.
The rating confirms the strength of Pagaya’s credit underwriting and the robustness of its loan portfolio. It also signals to institutional investors that Pagaya’s AI‑powered platform can deliver high‑quality, securitizable assets, potentially lowering future borrowing costs and supporting continued expansion in the auto‑loan market.
Overall, the preliminary ratings represent a significant milestone for Pagaya, validating its technology platform, enhancing its capital structure, and positioning the company for accelerated growth in the auto‑lending sector.
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