Trust Score Updates: Improved Thoroughness and Transparency

On February 5, 2025, our updated Trust Score will take effect for all loan originators with active ABS and note issuers with active Notes. Below is an overview of how the Trust Score works, what each component covers, and the updated scores for partners currently active or planning to publish ABS/Notes in coming days.

How the Trust Score Works

The Trust Score evaluates loan originators and note issuers across three weighted components:

• Legal Component (40%)
• Financial Component (40%)
• Other Component (20%)

Each component is scored independently—up to 40 points each for Legal and Financial, and up to 20 points for Other. The final Trust Score is the weighted sum of these three components.

Legal Component

Focuses on collateral, jurisdiction, and complexity:

• Collateral Type. Publicly registered collateral is considered more robust than contractual collateral.
• Jurisdiction of Collateral. Jurisdictions within the EU or where we have prior experience receive higher scores than those outside the EU or where we have no track record.
• Corporate Structure. Straightforward, transparent setups are scored higher; complex or opaque structures are marked down.
• Transaction Structure Complexity. Simple, direct money-flow arrangements score higher. Multiple parties, cross-border deals, or multi-step collateral requirements may lower the score.

Financial Component

Examines the economic stability of each loan originator or note issuer:

• Compliance with Covenants. Meeting financial ratios signals stability and raises the score.
• Credit History. Strong repayment records improve scores; defaults or delays reduce them.
• Tax Compliance. Clean tax records are favorable; unpaid taxes lower the score.
• Profitability. Positive performance over the past 12 months indicates stability and boosts the score.
• Equity Position. Positive equity suggests resilience; negative equity indicates higher risk.
• Asset Type. Tangible, liquid, high-value assets lead to higher scores than intangible or hard-to-value assets.

Other Component

Evaluates behavioral factors and overall partner reliability:

• Reputation. A strong market reputation enhances scores; controversies or negative publicity reduce them.
• Timely Reporting. On-time submission of required documents increases scores.
• Responsiveness. Prompt and helpful communication is rewarded.
• Track Record. Established partners generally score higher; newer entrants face greater scrutiny.

Ongoing Monitoring and Reviews

We continuously update Trust Scores to reflect current performance:

• Annual Reviews. Active Trust Scores undergo a yearly review by our credit committee.
• Quarterly Monitoring. We analyze financials each quarter. If significant changes arise, we re-evaluate and update the Trust Score.

Updated Trust Scores for Loan Originators and Note Issuers

Evergreen Capital (B)

• Legal Factors (D+): While supported by an effective legal framework, the complexity of structures and collateral types presents room for refinement.
• Financial Factors (A): Stable financial results, bolstered by adherence to financial covenants, though claim rights rather than physical assets form the primary asset base.
• Other Factors (A+): Highly cooperative, with consistent reporting and a reliable reputation.

Sandbox Funding (B+)

• Legal Factors (B): Supported by a strong legal framework and clear contractual protections. While the company’s structure and collateral are solid—and publicly registered—the reliance on claim rights makes the collateral harder to evaluate, leading to a partial deduction in the score.
• Financial Factors (A): The company meets its key financial covenants, consistently maintains a solid repayment record, and retains healthy equity alongside clean tax compliance. However, its reliance on claim rights—rather than tangible real estate or other high-value assets—results in a minor deduction from the highest possible rating.
• Other Factors (A+): Exceptional responsiveness and cooperation, with a proven track record in timely reporting and transparency.

Triple Dragon (C)

• Legal Factors (E+): Operating outside the EU/EEA introduces additional considerations for jurisdiction and legal protections, alongside opportunities to refine collateral practices.
• Financial Factors (B+): Maintains financial stability, though reliance on claim rights and previous payment delays have influenced the score.
• Other Factors (B): Responsiveness and reporting practices have shown improvement, with opportunities for further alignment.

What This Means for Investors

Only loan originators and note issuers meeting rigorous standards remain active. Those without current ABS or Notes do not receive updated scores unless a new issuance occurs. We will continue refining our process to provide clear, reliable insights so that you can make informed investment decisions.

This is a marketing communication and should not be interpreted as investment research, advice, or an endorsement to invest. The historical performance of financial instruments is not indicative of future outcomes. Investing involves risks; the value of investments may fall as well as rise. Be sure to assess your knowledge, experience, financial situation, and investment goals before investing.