ABS

Loans originated under Sallie Mae's Smart Option loan program, which have demonstrated significantly lower default rates compared with those from the Signature program, make up the entire collateral pool.

For the first time, the FIAOT shelf includes commercial vehicles originated through the SFS's Captive Program, extending vehicle financing to small business owners.

Before the transaction has amortization event, principal payments will enter full turbo during the deal's first 12 months.

The agreements leave Goeasy's revolving credit and securitization facilities in place, but interest spreads on both lines were increased by 100 basis points, and eligibility criteria were revised to exclude LendCare loans.

Fitch notes that the pool's collateral quality is consistent with previous transactions. The current deal has a FICO score of 774 and a diverse segment and vehicle mix.

This is the first Carvana Auto Receivables Trust series to include new vehicles, with the percentage or loans on new cars at 2.65%.

Letters of credit sized to cover interest payments for six months, plus a cushion, help provide credit support to the notes.

Underlying variable-rate loans were underwritten to the Chicago Mercantile Exchange (CME) Term SOFR or the average SOFR. Also, SMB 2026-A will not hedge the rated notes or the student loans in the trust.

Many credit drivers are stable; agencies are being vigilant about several macroeconomic factors that might destabilize borrowers' ability to keep servicing their auto loan debt. One is student loan debt.

Total initial credit enhancement increased to 11.40% for the class D notes, from 11.25%. It also decreased for classes B, C and E, and levels on the class A notes stayed the same.

The deal includes some structural changes, such as subordination levels of 41.05%, 32.25%, 19.45% and 6.10% on classes A, B, C and D, respectively, and all those levels increased from the previous deal.

A reserve account is in place, although its percentage of the pool balance decreased compared with the previous deal. Also, pre-pricing excess spread was 13.89%.

Canyon Partners sees opportunities in corners of the mortgage, with tightened due diligence, and the auto ABS markets.

Transactions from 2024 are performing better than deals issued in 2023, and deals from 2025 and 2024 are performing well with in expectations.

While Westlake's customer accounts usually have credit bureau scores ranging from 500 to 700, the WLAKE 2026-1 collateral pool's non-zero weighted average credit bureau score was 620.