American Credit Acceptance is returning to the capital markets to raise $549.2 million in securitized bonds, backed by a pool of retail automobile contracts extended to subprime quality buyers.
American Credit Acceptance Receivables Trust, series 2025-4, will sell notes to investors through five tranches—classes A, B, C, D and E, which will have maturity dates in May 2029, January 2030, January 2031, September 2031 and August 2033, respectively, according to Kroll Bond Rating Agency.
Loans on new and used automobiles and motorcycles will collateralize the ABS, according to KBRA, which will repay investors sequentially. Subordination follows, as a form of credit enhancement, KBRA said. The notes benefit from a cash reserve account that will be funded with an amount equaling 1.00% of the pool balance as of the statistical cutoff date.
The notes also receive some credit enhancement through overcollateralization. That level represents 15.5% of the pool balance initially and will increase to a target of 22.30%, the rating agency said.
ACAR 2025-4 also benefits from excess spread of about 15.27%, KBRA said.
The class A notes, which KBRA assigns a AAA rating, and which have the bulk of the outstanding note balance, $259.3 million, benefits from an enhancement level of 61.10%. After that, credit enhancement levels ranged from 52.6% on the AA-rated, class B notes to 16.50% on the BB-rated class E notes.
Otherwise, in terms of ratings, KBRA assigned A to the class C notes and BBB to the class D notes.
