Carvana is preparing its first securitization this year backed by a pool of prime retail auto loans, selling $602.7 million in notes through the Carvana Auto Receivables Trust, series 2025-P1.
The deal will sell notes through eight classes of notes, with classes A, B, C, D and N. The most senior tranche, the A1 notes, receive P1 ratings from Moody's Ratings and benefit from total initial hard credit enhancement representing 7.0% of the outstanding pool balance, and a reserve fund of 0.50% of the outstanding.
Moody's says 24,964 contracts are in the collateral pool. Borrowers have a weighted average (WA) FICO score of 702, and on a WA basis the loans have a loan-to-value (LTV) ratio of 95.0%.
CRVNA 2025-P1's A2 through A4 tranches also benefit from 7.0% in total credit enhancement and the 0.50% reserve fund. The class A notes have maturities of April 10, 2026 on the P1-rated notes; and for classes A2 through A4, all of which are rated Aaa, maturities range from June 12, 2028 through April 10, 2031, Moody's said.
According to Asset Securitization Report's deal database, S&P Global Ratings also assessed the notes, and assigns A1+ to the A1 notes; AAA to the A2 through A4 notes; AA+ to the class B notes; A+ to the class C notes; BBB+ to the class D notes and BB+ to the N tranche.
CRVNA 2025-P1's notes are priced to the one-month I-Curve, with coupons ranging from 4.4% on the notes rates P1/A1+ from Moody's and S&P, to 5.66% on the notes rated Ba1/BB+.
The deal's $22.5 million class N notes will be paid out to noteholders from any remaining funds after CRVNA 2025-P1 achieves its overcollateralization target. IT gets credit enhancement from a reserve account specific to it. The class will not provide any credit support to the classes A, B, C and D notes, however.
Deutsche Bank Securities, Santander US Capital Markets and Wells Fargo Securities are lead underwriters on the deal, according to Moody's.
Bridgecrest Credit is on the deal as servicer, has more than 30 years of experience servicing auto loans, with a servicing portfolio of about $21 billion. The deal also benefits as credit enhancement builds up as the pool amortizes.
Yet CRVNA 2025-P1 has several credit challenges, stemming from declining profitability during 2022 and 2023, and weakened securitization and portfolio performance in those years. That profitability is still bouncing back. Also, compared to Carvana's 2024 deals, the collateral has a custom deal score of 73.5, lower than the 74-75 range seen in last year's pools. It is also more in line with the custom deal scores seen in the 2022 and 2023, the years when its profitability had weakened.
