Pagaya completes $450 million auto resecuritization, marking a first in AI-driven lending.

      Three years ago, institutional investors took a bold step by purchasing bonds secured by auto loans selected by an algorithm. Now, Pagaya Technologies is inviting them to do it again with the same loans.

      The Israeli-founded, New York-based fintech announced on Monday that it has successfully completed a $450 million auto resecuritization transaction, marking the first refinancing deal under its Research-Driven Pagaya Motor (RPM) shelf. According to a press release, the deal, named RPM 2026-R1, consolidates receivables initially securitized through three prior RPM transactions from 2023 and 2024, turning them into new notes for capital market investors.

      This transaction is significant in any context. Resecuritization, which involves refinancing pools of loans that have already undergone one round of securitization, is typical in prime mortgage markets but uncommon in subprime auto lending, and even less frequent when the underlying credit decisions are made by a machine-learning model instead of a human underwriter.

      The importance of resecuritization

      The transaction indicates that Pagaya’s AI-chosen loan portfolios have performed sufficiently well to attract a second round of institutional investment, suggesting that AI startups transforming enterprise infrastructure are successfully proving their models in capital markets. Rating agency KBRA, which provided preliminary ratings for six classes of notes totaling approximately $442 million in mid-March, confirmed that the receivables were originally included in RPM 2023-3, RPM 2023-4, and RPM 2024-1. This deal marks the 59th publicly rated securitization sponsored by Pagaya’s structured-products division.

      The core of EU tech

      The latest developments from the EU tech sector, a narrative from our wise founder Boris, and some dubious AI art are available for free, every week in your inbox. Subscribe now! For Pagaya, the resecuritization initiative enables a new level of capital efficiency. Instead of holding seasoned loan pools to maturity or selling them off at a loss, the company can reinvest capital by refinancing existing portfolios, effectively prolonging the productive life of every loan its AI interacts with. With projections of a decline in auto ABS performance in 2026 from analysts at KBRA and S&P Global, showcasing that investors are willing to refinance AI-originated notes sends a strong message.

      A year of continuous issuance

      The RPM 2026-R1 deal is part of an aggressive capital-market strategy. In February, Pagaya initiated 2026 with an $800 million consumer-loan ABS. In March, it closed RPM 2026-1, a $400 million standard auto securitization that attracted over 20 investors, most of whom had previously participated. Additionally, the company has established a $700 million revolving funding line backed by personal loans, funded by 26North, and finalized a forward-flow agreement worth up to $500 million with asset manager Castlelake.

      Since 2018, Pagaya has executed 83 securitizations, accumulating over $34 billion in capital to finance loans sourced through its partner network. Its investor base now exceeds 150 institutions.

      The figures behind the platform

      Pagaya reported $1.3 billion in revenue for 2025, representing a 26 percent year-on-year increase, alongside $371 million in adjusted EBITDA and $81 million in GAAP net income, achieving its fourth consecutive profitable quarter. CEO Gal Krubiner anticipates revenue between $1.4 billion and $1.575 billion in 2026, while indicating a strategic shift away from higher-risk credit segments in favor of disciplined risk management and cautious volume growth.

      This restraint may be tactical. Auto ABS delinquency rates have been increasing, especially in the non-prime segment where Pagaya operates. Weighted-average loan-to-value ratios on non-prime loans grew by about five percentage points between 2022 and 2025, even as vehicle values moderated. The company seems to be betting that stricter underwriting, along with more advanced capital recycling, will maintain growth without targeting riskier borrowers.

      Implications for AI-driven lending

      Pagaya’s resecuritization program is emerging at a time when the fintech lending sector faces dual challenges: strong investor demand for yield paired with declining credit performance in consumer auto. The company’s capability to refinance established AI-originated portfolios could provide a model for other algorithm-based lenders needing to validate their models throughout complete market cycles.

      Whether the AI advantage is genuine or only effectively marketed remains an unresolved issue for the structured-finance community. However, with $450 million at stake and a lineup of institutional investors eager to repurchase the same loans, Pagaya has certainly garnered another opportunity for consideration.