Online car retailer Carvana (NYSE:CVNA) plans to sell $400 million in senior and subordinate bonds backed by a pool of non-prime auto loans originated by the company.
Tempe, Ariz.-based Carvana – which exclusively sells and finances autos via virtual show rooms and home vehicle delivery – underwrites both prime and subprime loans, but last year created a new shelf through which to issue asset-backed securities secured solely by non-prime collateral.
Carvana Auto Receivables Trust 2021-N2 is the third deal overall sponsored by the auto lender/retailer to include a pool exclusively made of non-prime loans. It is Carvana’s ninth securitization since 2019, which have included two prime-loan ABS deals
The offering includes two senior tranches: $143 million of Class A-1 notes and $42.4 million in Class A-2 bonds, each with seven-year maturities. Each carries preliminary AAA ratings from S&P Global and DBRS Morningstar.
The notes are supported by 54.9% credit enhancement, similar to
Also being offered are $53.6 million in Class B notes with double-A ratings; $58.2 million in Class C notes (rated A), and a triple-B $40.8 million Class D tranche. Unrated Class E notes totaling $62 million will either be retained by the Carvana trust or issued through private placements, according to ratings agency reports.
The transaction is the eighth overall for Carvana, which was founded in 2012 as a subsidiary of DriveTime Automotive Group, but today operates independently with a shared-services agreement with its former parent. Carvana went public in 2017.
Carvana directly finances approximately 75%-80% of all of its used-car sales.
Carvana has 291 locations across the country.
