Pre-owned car giant CarMax is preparing to issue another asset-backed security, the latest in a string of billion-dollar-plus transactions.
The CarMax Auto Owner Trust 2022-2 loan pool could be upsized to $1.43 billion, according to an April 18 presale report from S&P Global Ratings.
S&P has rated 16 CAOT transactions from 2018 through 2022.
Structurally, Richmond-based “CarMax will sell a pool of auto loan receivables to CarMax Auto Funding LLC, which will then sell the receivables to CAOT 2022-2, the transactions issuing trust,” S&P wrote.
The CAOT 2022-2 transaction, underwritten by BofA Securities, includes four tranches of senior notes and three subordinate class note offerings. The class A —1 notes total $210 million (or $255.7 million from the upsized pool) and are rated at ‘A —1+.’ Class A— 2a/A—2b has a preliminary rating of ‘AAA’ and a base amount of $385.72 million but could be upsized to $470.75 million. Class A—3 has a preliminary rating of ‘AAA’ and a base amount of $385.72 and an upsized amount of $470.75 million. Class A—4 has ‘AAA’ rating and a base amount of $107.99 million and an upsized amount of $129 million. None of the tranches is rated lower than ‘A—.’ S&P analysts Peter W Chang, CFA, Tiffany English-Kandel, Steve D Martinez, and Kunal Yadav, a research contributor, worked on the presale report.
The pool consists of 60,821 (74,036 if upsized) loans totaling $1.18 billion in motor vehicle loans originated by CarMax’s affiliates, S&P said.. The average loan balance is $19,353 and the weighted average APR is 7.79%. The weighted average original term is 66.65 months with a remaining term of 60.39 months. The weighted average seasoning is 6.26 months. The weighted average FICO score is 711 and nearly all the vehicles are used.
S&P said that it believes that the series 2022-2 collateral credit characteristics are slightly better than the 2022-1 due to a higher percentage of borrowers in the two highest credit score categories and a higher weighted average FICO score. The previous trust had an average weighted 707 FICO score.
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