AmeriCredit Financial Services, a unit of GM Financial, is marketing its second subprime auto loan securitization of the year, according to Moody’s Investors Service.
AmeriCredit Automobile Receivables Trust 2016-2 will issue $1.088 billion of notes backed by retail installment auto loan contracts originated or acquired by AmeriCredit Financial Services. The senior securities are rated ‘Aaa’ and benefit from credit enhancement of 37%.
Moody’s cumulative net loss expectation for the 2016-2 asset pools is 9%, the same as for AmeriCredit’s prior securitization. This is despite the fact that the credit quality of the pool is lower; the weighted average FICO for both pools is 574, but the latest deal has a slightly higher loan-to-value ratio of 110% (vs 109% for the previous deal),
Moody’s said that the increased seasoning (9 months versus 7 months for the previous deal) of the collateral mitigates its concerns about other credit metrics. The risk of default is typically highest early in the life of the loan, before the borrower has built up any equity.
Also both the 2016-2 and 2016-1 pools “are of similar or better credit quality compared to the 2015-2, 2015-1, and 2014-3 pools which have performed within our expectations,” the presale report states.
Among other ratings considerations, Moody’s cited Americredit’s 20 years of experience as a servicer. It had a total serviced portfolio of approximately $18.2 billion as of December 31, 2015 and a stable track record.
Also, AmeriCredit’s securitization weathered the most recent recession better than its subprime peers. AMCAR transactions that closed between 2006 and 2008 experienced losses ranging from 1.2 times to 1.7 times original expectations, compared with 1.2 times to 2.0 times for the entire subprime sector, according to Moody’s.
This is the 38th senior-subordinate issuance sponsored by AmeriCredit since 1994.