Carvana is sponsoring its third transaction of the year, issuing $1 billion in asset-backed securities (ABS) secured by revenue from prime quality auto loans that the company originated.
The transaction, Carvana Auto Receivables Trust, 2025-P3, will issue notes through eight tranches, according to Moody's Ratings. The debt has legal final maturity dates ranging from Oct. 12, 2026 on the A1 notes through Sept. 12, 2033 on class N notes. The latter will be repaid if funds are available after the deal achieves its overcollateralization target.
Bridgecrest Credit company is the servicer, while Vervent is on the deal as backup servicer, Moody's said.
Coupons range from 4.17% on the A1 notes, rated P1/A1+ by Moody's and Fitch Ratings, respectively, to 5.38% on the class N notes, which S&P rates BB, according to Asset Securitization Report's deal database. Nots are priced over the one-month I-Curve
Santander US Capital Markets is CRVNA 2025-P3's lead underwriter, according to Moody's. Deutsche Bank and
All the class A tranches have total initial hard credit enhancement that equals 9.90% of the note balance. The credit enhancement includes a fully funded, non-declining reserve fund representing 0.50% of the note balance on most of the classes. That is, except the class N notes whose reserve fund represents 0.25%, Moody's said.
The deal has a target overcollateralization level of 0.20%, which is also the floor level. CRVNA 2025-P3's notes also benefit from annualized excess spread of about 6.48%. The deal has a sequential repayment order, so credit enhancement will build over time, according to Moody's.
As a sponsor, however, Carvana has had some drawbacks. Founded in 2012, the company's profitability weakened in 2022 and 2023. Since then, the company has bounced back with higher unit sales and material improvement in retail gross profit per vehicle, according to Moody's.
The collateral pool contains 38,802 contracts, which have a loan-to-value (LTV) ratio of 96.4%. Also, borrowers have a weighted average (WA) FICO score of 702.
