As promised, non-prime auto lender AmeriCredit Corp. brought an auto loan ABS last week, backed by a wrap from guarantor XL Capital, albeit three months after initially thought (see ASR 2/24/03).
The $825 million fixed- and floating-rate 2003-B-X transaction, led jointly by Credit Suisse First Boston and Deutsche Bank Securities, priced inside of initial price guidance across the board and in line with its most recent deal, which was wrapped by XLCA rival MBIA. Additionally, the strong demand led to an
upsizing, from the $600 million initially offered.
"Since pricing, AMCAR 2003-A-M tightened in three or so basis points across the board, which helped give some very positive momentum going into this deal," noted a syndicate source.
Expanding surety exposure is part of the issuer's plan. AmeriCredit had initially planned on a pair of securitizations, according to company spokesman John Hoffmann, adding that it always planned one wrapped by MBIA and one wrapped by XLCA.
"AmeriCredit does plan to work with XL Capital in future ABS offerings," he said when the MBIA deal priced.
After much speculation earlier in the year, it is the third liquidity injection AmeriCredit has lined up, totaling $2.6 billion. Aside from the MBIA-wrapped 2003-A-M deal, AmeriCredit closed a $1 billion whole loan facility via Deutsche Bank in March (see
Following the previous transaction's pricing, market sources said that, at the time, the MBIA wrap was the safer bet for its first offering of the year. "Investors are more comfortable with MBIA," one source said.
While collateral composition of the AMCAR trust is consistent with previous transactions, which have seen improved delinquency data, there are lingering concerns going forward with the parent. In April, Fitch Ratings cut the corporate unsecured ratings of AmeriCredit to B' from B+'. In January, Moody's Investors Service cut the unsecured ratings at the parent level to B1'
Both rating agencies have AmeriCredit on watch for a possible downgrade. "The negative outlook reflects continued liquidity constraints due to weakened asset quality measures of securitizations and increased enhancement requirements for new transactions," Fitch says in its presale report for
As a result, JPMorgan Chase unit System & Servicing Technologies (SST) was recruited as a backup servicer, to take over in the event of a servicer termination event. SST also acts as backup servicer on the aforementioned 2003-A-M transaction. AmeriCredit has used two other surety providers in the past. The majority of its ABS is guaranteed by FSA, with two wrapped by MBIA. The FSA-wrapped deals have hit performance triggers and began trapping cash away from the parent.