Morningstar DBRS Assigns Provisional Credit Ratings to OneMain Financial Issuance Trust 2025-1

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of notes to be issued by OneMain Financial Issuance Trust 2025-1 (OMFIT 2025-1 or the Issuer):

-- $439,550,000 Series 2025-1, Class A at (P) AAA (sf)
-- $57,640,000 Series 2025-1, Class B at (P) AA (sf)
-- $41,120,000 Series 2025-1, Class C at (P) A (sf)
-- $61,690,000 Series 2025-1, Class D at (P) BBB (low) (sf)

CREDIT RATING RATIONALE/DESCRIPTION
The credit ratings are based on Morningstar DBRS's review of the following analytical considerations:
-- Transaction capital structure, proposed credit ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization, subordination, amounts held in the reserve funds, and excess spread. Credit enhancement levels are sufficient to support Morningstar DBRS' stressed projected finance yield, principal payment rate, and charge-off assumptions under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the credit ratings address the payment of timely interest on a monthly basis and principal by the legal final maturity date.
-- OneMain Finance Corporation's (OneMain) capabilities with regard to originations, underwriting, and servicing.
-- Morningstar DBRS has performed an operational review of OneMain and considers the OneMain entities that are party to this transaction acceptable originators and OneMain an acceptable servicer of personal loans.
-- OneMain's senior management team has considerable experience and a successful track record within the consumer loan industry.
-- OneMain is a routine issuer in the asset-backed securities market.
-- The credit quality of the collateral and performance of OneMain's consumer loan portfolio. Morningstar DBRS used a hybrid approach in analyzing the OneMain portfolio that incorporates elements of static pool analysis, employed for assets such as consumer loans, and revolving asset analysis, employed for such assets as credit card master trusts.
-- The weighted-average (WA) remaining term of the collateral pool is approximately 48 months.
-- OneMain's finance yield was relatively stable from 2005 through 2010, ranging from 18.00% to 21.00%. Beginning in 2011, finance yield increased, averaging slightly more than 24.00% since 2014. The WA coupon of the initial pool is approximately 24.86% and the transaction includes a reinvestment criteria event if the WA coupon, as billed, is less than 21.00%.
-- The Morningstar DBRS base-case assumption for the finance yield is 21.00%.
-- Morningstar DBRS applied a finance yield haircut of 10.00% for the (P) AAA-rated tranche, 8.00% for the (P) AA-rated tranche, 6.00% for the (P) A-rated tranche, and 3.33% for the (P) BBB (low)-rated tranche. These haircuts are lower than the range described in the Morningstar DBRS methodology "Rating U.S. Credit Card Asset-Backed Securities." Morningstar DBRS also used its "Rating U.S. Structured Finance Transactions" methodology when determining the assumptions. In addition, the fixed-rate nature of the underlying loans, lack of interchange fees, and historical yield consistency support these stressed assumptions.
-- Principal payment rates for OneMain's portfolio, as estimated by Morningstar DBRS, have generally averaged between 2.00% and 5.00%.
-- The Morningstar DBRS base-case assumption for the monthly principal payment rate is 2.80%.
-- Morningstar DBRS applied a payment rate haircut of 35.00% to the (P) AAA-rated tranche, 30.00% to the (P) AA-rated tranche, 25.00% to the (P) A-rated tranche, and 16.67% to the (P) BBB (low)-rated tranche. These haircuts are lower than the range described in the Morningstar DBRS methodology "Rating U.S. Credit Card Asset-Backed Securities." Morningstar DBRS also used its "Rating U.S. Structured Finance Transactions" methodology when determining the assumptions. In addition, the fixed terms of the loans (no more than a 58-month WA remaining term) and OneMain's payment rate behavior over the 2008-10 period support these stressed assumptions.
-- Charge-off rates on the OneMain portfolio have generally ranged between 4.00% and 10.00%. Chargeoffs increased significantly during the 2008-10 economic stress but came down and have been seasonally stable since then. Starting in 2022, there was some inflation-driven credit deterioration in performance through early 2023, and the Company has taken many steps to tighten credit since then. The OMFIT 2025-1 concentration limits allow for more Risk Tier C and Risk Tier D to be placed into the collateral pool during the revolving period. The Morningstar DBRS-expected charge-off rate based on the worst-case pool concentrations is 12.60%. Morningstar DBRS assumed a 5.0% recovery credit for both the secured and unsecured collateral.
-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary "Baseline Macroeconomic Scenarios for Rated Sovereigns March 2025 Update," published on March 26, 2025. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the depositor, the nonconsolidation of the special-purpose vehicle with OneMain, and that the trust has a valid first-priority security interest in the assets and is consistent with Morningstar DBRS' "Legal Criteria for U.S. Structured Finance."

Morningstar DBRS' credit ratings on the Class A, Class B, Class C, and Class D Notes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Monthly Interest Amount and the related Note Balance.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, is related to interest on any unpaid Monthly Interest Amount for each of the rated notes and the premium to noteholders for the optional call of the transaction.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS 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.

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

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196.

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

The principal methodology applicable to the credit ratings is Rating U.S. Structured Finance Transactions (Appendix I: U.S. Consumer Loan ABS Transactions) (March 10, 2025), https://dbrs.morningstar.com/research/449616.

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

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.

Morningstar DBRS 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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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://dbrs.morningstar.com/about/methodologies.

-- Operational Risk Assessment for U.S. ABS Originators and Operational Risk Assessment for U.S. ABS Servicers (March 26, 2025)
https://dbrs.morningstar.com/research/450709

-- Rating U.S. Credit Card Asset-Backed Securities (August 6, 2025)
https://dbrs.morningstar.com/research/437551

-- Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.