Carvana is marketing bonds backed by its second securitized pool of prime-only auto loans.
The $432 million CRVNA 2021-P1 transaction consists of 21,606 loans originated from its e-commerce platform operating in 272 markets across the country. The transaction is a follow-up to the nationwide used-car retailer’s
All of the accounts are from borrowers with a weighted average FICO of 707, although they were segmented into the prime pool based on Carvana’s internal credit-scoring model.
Carvana’s trust will issue eights classes of senior and subordinate notes, all rated by Kroll Bond Rating Agency, S&P Global Ratings and DBRS Morningstar. Three classes carry preliminary AAA ratings from the agencies: a Class A-2 tranche due March 2024 and a Class A-3 tranche due December 2025 sized at $130 million apiece, and a $68 million Class A-4 tranche due January 2027.
The agencies also apply top short-term ratings from each to a $50 million money-market tranche.
The transaction is the seventh overall for Carvana, which previously issued asset-backed portfolios collateralized by prime and non-prime accounts before last December’s prime ABS debut.
Prior to 4Q2020, Carvana sold between 40%-50% of its qualifying non-prime/near prime loans to Ally Bank through a forward-flow agreement. According to Kroll Bond Rating Agency, Carvana has held out from further loan sales to Ally in the fourth quarter and first quarter to ramp up assets for its prime shelf issuance.
The company reported its first quarter of positive earnings in the third quarter of 2020, and had a 42% revenue gain between 2019 and 2020.
But it still reported net losses of $462.2 million for the 2020 fiscal year as it finances expansion into new markets and makes infrastructure investments in Website channel, inspection centers, physical vehicle distribution network, as well as its signature vending-machine locations where customers can pick up vehicles purchased online.
Carvana’s loans are serviced by DriveTime affiliate Bridgecrest.
