American Credit Acceptance plans to issue $259.17 million of securities backed by retail subprime auto loan receivables, its second public deal in 2014.
Deutsche Bank and Wells Fargo are the lead underwriters on the deal, ACAR 2014-2.
Standard & Poor’s expects to assign 'AA’ ratings to the $149.29 million of class A notes issued under the capital structure. The notes are due October 2017.
Three subordinate tranches are also offered. S&P expects to assign a A’ rating to the $50.77 million, class B notes due March 2020; the $44.71 million class C notes due March 2020 will be rated BBB’; and the $14.4 million, class D notes due May 2021 will be rated BB’. The credit enhancement levels for the class A, B, C, and D notes are 52.75%, 36.00%, 21.25%, and 16.50% of the initial pool balance, respectively.
The deal has a three-month prefunding period that will end on July 10, 2014. On the closing date, the issuer will deposit approximately $51.8 million of the proceeds from the sale of the notes into the prefunding account.
The loan pool is comprised of loans with a weighted average FICO of 534 and 51.48% of the loans in the pool have an original term of 6172 months.
ACA has been consistently profitable since 2009, according to the S&P presale. The company’s auto managed loan portfolio grew 38% year over year to $969 million at the end of Feb. 2014, while its collateral performance weakened with net losses increasing to 16.9% from 14.8% a year ago.