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Rating Action:

Moody's upgrades Enova's ratings to B2; outlook stable

27 Jun 2019

New York, June 27, 2019 -- Moody's Investors Service ("Moody's") has upgraded Enova International, Inc.'s ("Enova") corporate family and senior unsecured debt ratings to B2 from B3. The outlook is stable.

The rating upgrade reflects the increase in the company's capitalization through earnings retention, which provides creditors with greater protection against unexpected losses.

Moody's has also withdrawn the outlooks on Enova's corporate family rating and senior unsecured debt rating for its own business reasons. Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.

Upgrades:

..Issuer: Enova International, Inc.

.... Corporate Family Rating, Upgraded to B2 from B3, Stable outlook withdrawn

....Senior Unsecured Regular Bond/Debenture, Upgraded to B2 from B3, Stable outlook withdrawn

Outlook Actions:

..Issuer: Enova International, Inc.

....Outlook, Remains Stable

RATINGS RATIONALE

The upgrade of Enova's ratings to B2 from B3 reflects a substantial progress the company has made in improving its capitalization through earnings retention in the past few quarters. In Moody's view, the increase in the company's capitalization levels substantially reduces its credit risk, providing a buffer for unexpected losses, which could stem from Enova's fast portfolio expansion or result from an economic downturn. The rating upgrade also reflects Enova's consistently strong earnings generation capacity, with minimal amounts of one-time costs.

As of 31 March 2019, Enova's tangible common equity represented 10% of its tangible assets, a significant improvement from 5% a year ago. Since its spin-off from Cash America, International, Inc. in November 2014, Enova has demonstrated consistently strong earnings with minimal amounts of one-time costs.

As with all payday lenders, Enova faces a high regulatory risk; however, the company's lower reliance on payday loans mitigates this concern. Moody's believes that Enova is better positioned for possible adverse changes in regulations than its branch-based peers, given its scalable online model with a lower fixed cost base, as well as its lower reliance on payday loans compared to most other peers. In 2018, 20% of Enova's revenues were derived from payday loans.

While Enova's annual rate of loan portfolio expansion has slowed down to less than 20% in the first quarter of 2019 from over 30% in 2017, it remains fairly high. In general, Moody's views fast portfolio expansion as credit negative, given that high growth could present credit risks if underwriting is loosened. Partially mitigating this concern is Enova's substantially improved capitalization, which provides a higher loss absorption capacity. In addition, most of the growth in absolute terms has been in Enova's NetCredit installment loan portfolio, which targets borrowers with more established credit history, and which has lower levels of credit losses compared to other products in Enova's portfolio. Finally, Moody's believes that with Enova's extensive investments in its data analytics and underwriting over the years would help it reduce volatility in its asset quality through an economic cycle.

WHAT COULD CHANGE THE RATINGS UP/DOWN

The ratings for Enova could be upgraded if the company further improves its capitalization, while maintaining consistently strong profitability through an economic cycle, with well-managed asset quality, as well as if there is material reduction in the regulatory risk related to high-cost lending.

Enova's ratings could be downgraded if its underwriting standards weaken amidst high loan portfolio growth, or if its profitability and leverage meaningfully deteriorate, and if its liquidity materially weakens. Enova's ratings could also be downgraded if the company pursues an aggressive financial policy, with substantial capital distributions.

The principal methodology used in these ratings was Finance Companies published in December 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Anna Sherbakova
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Ana Arsov
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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