Mulligan Asset Securitization III assigns preliminary ratings to $100 million 2026-1 notes

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Mulligan 2026-1 notes ratings

Highlights

Mulligan Asset Securitization III LLC assigns preliminary ratings to four note classes totaling $100 million for the 2026-1 deal, as reported by Kroll Bond Rating Agency.
The 2026-1 notes can expand to a $500 million maximum during the 36-month revolving period if issuer conditions and rating agency confirmation are met, without existing noteholder consent.
The structure allows up to 30% of the notes to be called at 103% of par in year one or 101% in year two, with redemptions pro rata.

Structure of the 2026-1 securitization

As reported by Kroll Bond Rating Agency, preliminary ratings are assigned to four classes of notes to be issued by Mulligan Asset Securitization III LLC, Series 2026-1. The issuer plans to sell Class A, Class B, Class C and Class D notes with a combined initial balance of $100 million.

The transaction marks Mulligan Funding's third securitization. During the 36-month revolving period, unless a rapid amortization event occurs, the issuer may buy additional receivables that meet eligibility criteria and concentration limits.

The notes are structured as expandable term notes, allowing the issuer to increase the current issuance during the revolving period up to a maximum of $500 million if specified conditions are met, including rating agency confirmation. Existing noteholders do not need to consent to these upsizes, although the additional issuance may dilute their control and voting rights.

The issuer may also sell additional series of notes without the consent of holders of the Series 2026-1 notes. The structure also includes a partial call option under which up to 30% of the outstanding note balance may be redeemed at 103% of par in the first 12 months or 101% of par in the second 12 months, with any such redemption applied pro rata across the notes.

Business profile and market context

Mulligan Funding provides financing to small and medium-sized businesses using proprietary risk scoring models, transactional data and technology systems. Since inception, the company says it has funded more than $2.8 billion to over 29,000 merchants.

The company is primarily owned by senior management and Ptolemy Capital LLC, employs more than 110 people and is headquartered in San Diego, California. According to the company, it has been profitable in most years since 2008.

For specialty finance lenders, securitization remains a key funding channel because it can broaden capital access beyond warehouse lines and equity. The expandable feature in Mulligan's latest deal gives the company room to add receivables and increase issuance capacity over time, while the noteholder terms show how flexibility for the issuer can be balanced against investor protections and rating agency oversight.

In our earlier coverage of KBRA’s April 2026 review of the Carvana Auto Receivables Trust, we explained that the agency affirmed ratings on 48 note classes and upgraded 15 across 13 transactions, citing credit enhancement levels as supportive of the rating actions. We also outlined the surveillance approach and key deal context, including collateral performance monitoring, the servicing role of Bridgecrest Credit Company, and Carvana’s reported liquidity and funding capacity at the time.

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