Three years prior, institutional investors ventured into purchasing bonds secured by auto loans chosen by an algorithm. Pagaya Technologies now asks them to reinvest in these same loans.
On Monday, the Israeli-founded, New York-based fintech announced the closure of a $450 million auto resecuritization transaction, marking the first refinancing deal under its Research-Driven Pagaya Motor (RPM) shelf. As per a press release, the RPM 2026-R1 deal consolidates receivables initially securitised through three RPM transactions from 2023 and 2024, reissuing them as new notes for capital-markets investors.
This achievement marks a significant milestone. Resecuritization, the practice of refinancing loan pools that have undergone a prior securitisation round, is prevalent in prime mortgage markets but uncommon in subprime auto lending, especially where credit decisions are made by machine-learning models rather than human underwriters.
Why resecuritization matters
The transaction indicates that Pagaya’s AI-selected loan portfolios have performed sufficiently well to attract a second round of institutional capital, as AI startups in capital markets increasingly demonstrate their models. Rating agency KBRA, which had provided preliminary ratings for six classes of notes totaling roughly $442 million in mid-March, confirmed that the receivables initially appeared in RPM 2023-3, RPM 2023-4, and RPM 2024-1. This deal is Pagaya’s structured-products arm’s 59th publicly rated securitisation.
For Pagaya, the resecuritization program enhances capital efficiency. Instead of holding seasoned loan pools to maturity or selling at a discount, the company recycles capital by refinancing existing portfolios, effectively extending the useful life of each AI-managed loan. In a market where auto ABS performance is expected to weaken in 2026, proving that investors will refinance AI-originated paper sends a strong message.
A year of relentless issuance
The RPM 2026-R1 deal occurs amid an intense capital-markets campaign. Pagaya began 2026 with an $800 million consumer-loan ABS in February. In March, it finalized RPM 2026-1, a $400 million standard auto securitisation attracting over 20 investors, mostly returning participants. The company also secured a $700 million revolving funding facility backed by personal loans, with investment from 26North, and formed a forward-flow arrangement worth up to $500 million with asset manager Castlelake.
Since 2018, Pagaya has completed 83 securitisations, raising over $34 billion to fund loans via its partner network, with a current investor base exceeding 150 institutions.
The numbers behind the platform
Pagaya reported $1.3 billion in revenue for 2025, a 26 percent year-on-year increase, alongside $371 million in adjusted EBITDA and $81 million in GAAP net income, marking its fourth consecutive profitable quarter. CEO Gal Krubiner projected revenue between $1.4 billion and $1.575 billion for 2026, while suggesting a strategic retreat from higher-risk credit areas in favor of cautious risk management and deliberate volume growth.
This restraint may be strategic. Auto ABS delinquency rates have risen, notably in the non-prime segment where Pagaya operates. Weighted-average loan-to-value ratios on non-prime originations increased by about five percentage points from 2022 to 2025, even as vehicle values stabilized. The company seems to be betting on tighter underwriting, paired with advanced capital recycling, to sustain growth without pursuing riskier borrowers.
What it means for AI-driven lending
Pagaya’s resecuritization initiative coincides with dual pressures in the fintech lending sector: while investor demand for yield remains robust, credit performance in consumer auto is deteriorating. The company’s capability to refinance seasoned AI-originated portfolios may establish a model for other algorithm-driven lenders needing to prove their models perform well throughout full market cycles.
Whether the AI edge is genuine or primarily marketing remains a question for the structured-finance community. However, with $450 million involved and a line of institutional investors willing to purchase the same loans a second time, Pagaya has earned another opportunity to prove its case.