Seasoned auto loan securitization issuer CarMax Auto Owner Trust 2021-3 could issue either $1.2 billion in notes, or $1.7 billion, and is largely in line with other transaction. The trust is back with the third securitization of 2021, extending a well-established track record of about 67 public and private deals previously.
The trust will issue notes secured by payments on prime-quality, retail auto loan contracts, originated by CarMax Business Services, a subsidiary of CarMax, Inc., according to Moody’s Investors Service. The trust’s long track record is considered a strength with the deal.
The initial note balance could either be $1.2 billion or $1.7 billion, depending on market conditions at the time of pricing. RBC Capital Markets is the lead underwriter on the deal, and has put together a capital structure that will make use of subordination and overcollateralization. It will also feature four classes of A notes, three of subordinate classes, plus overcollateralization of 0.25% of the deal’s assets. It also has a cash reserve.
CarMax could either contain 70,689 or 102,990, depending on whether the initial note balance is $1.2 billion, or $1.7 billion, respectively. Almost all of the vehicles, regardless of the deal’s initial note balance, will be used, Moody’s.
But other aspects of the deal are steady, such as the weighted average (WA) FICO score, 706; WA APR, about 8.2%, five months of seasoning and a WA remaining term of 61 months.
In terms of geographic diversity, California accounts for the highest concentration of loans, 17.7%; followed by Texas, with 10.1%; Florida, with 8.3%; Illinois, with 4.7% and Pennsylvania, with 1.4%.
That concentration is largely similar to issuances from other prime issuers, not necessarily all from CarMax.
Regardless of the initial note balance, Moody’s expects to give a ‘AAA’ rating to the A-1 class, and ‘AAA’ ratings to the four subsequent senior notes. The B, C, and D classes, also regardless of the initial note balance, will receive ratings of ‘Aa2’, ‘A2’, and ‘Baa1’, according to Moody’s.
