Ratings analysts at Moody's Ratings and Kroll Bond Rating Agency put a series of securitizations from subprime auto lender Tricolor Holdings on watch for possible downgrades, after the company filed for chapter 7 bankruptcy protection in Texas Wednesday.
Moody's placed 25 classes of the Tricolor Auto Securitization Trust on review for downgrade from five asset-backed securities (ABS) deals. All the notes were backed by borrower payments from non-prime retail auto loan contracts that Tricolor Auto Acceptance and its affiliates originated, the company said Wednesday.
According to media reports, Tricolor suspended operations and furloughed its staff, with plans to liquidate.
Kroll Bond Rating Agency placed all 34 of its outstanding ratings on watch for downgrade. Tricolor originated the loans and services them, while Vervent serves as back-up servicer.
"KBRA will continue to monitor the performance of the transactions and will seek to resolve or update the Watch Placements within 90 days," KBRA wrote.
Founded in 2007, Tricolor focused on extending loans to people with limited credit history or no credit history to purchase late-model, fully reconditioned vehicles, according to the company's website. Based in Irving, Texas, the company offered bilingual sales serviced to its largely Hispanic customer base through almost 30 locations in Texas and California.
