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AmeriCredit to Issue 3rd Subprime ABS of 2016

AmeriCredit’s third subprime auto loan securitization for the year displays the company’s recent shift toward more new car originations with lengthier terms.

AmeriCredit Automobile Receivables (AMCAR) Trust 2016-3 is a preliminary $1.025 billion issuance of fixed and floating rate notes split among seven classes of senior and subordinated classes. The deal could be upsized to $1.3 billion by the time of closing, according to presale reports from Standard & Poor’s and Fitch Ratings.

The initial portfolio is comprised of $1.08 billion in 49,259 loans with an average balance of $22,090 – up significantly from AmeriCredit’s previous 2016-2 transaction average balance of $19,316. That rise was due to an increased level of new cars in the pool (56.6% vs. 53.7%) and less highly seasoned collateral (4.5 months to 7.7 months in 2016-2), according to S&P.

This is the first AMCAR securitization to include contract lengths of 73-75 months, that the company began originating in 2015, according to Fitch's presale report.

The loans are primarily to customers with FICO scores below 600, with the average weighted FICO score of borrowers at 577. Loan-to-value ratios average 108% for the pool of loans.

The portfolio has three series of senior Class A notes, including a short-term money market tranche totaling $173 million (or $221 million, if the deal is upsized to the higher level). Those notes carry a one-year ‘A-1+’ rating from S&P and ‘F1+’ from Fitch.

The largest notes issue, Class A-2, is to be split into fixed and floating rate tranches, with a preliminary level of $310 million, or $400 million if upsized. The sizes of the fixed/floating tranches will be determined at closing.

The A-2 notes, as well as a $243.88 million Class A-3 fixed series of notes, are each Triple-A rated by the agencies. (The potential upsizing would boost those to $323.94 million in notes).

Fitch and S&P differ slightly on the levels of credit enhancement assigned to the notes. S&P lists 34.7% CE on the Class A notes, while Fitch reports 35.2% CE support.

The latest AMCAR deal is the 93rd securitization by AmeriCredit since 1994.

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