Carvana is preparing to issue $238.4 million in auto asset-backed securities (ABS), with a pool of mainly non-prime obligors collateralizing the outstanding notes. The transaction, CRVNA 2023-N4, is slated to come to market in time for a November 29 closing.
The deal comes as Carvana reported that its net income for the three months ending on September 30 was $782 million, a strong turnaround compared with a net loss of $58 million for the three months ending on June 30, according to ratings analysts from June 30.
Nevertheless, it was part of a mixed reporting picture, because total revenue has decreased approximately 6.6% for the three months ended Sept. 30, 2023, also compared to the previous earning period. Cash and cash equivalents did increase to $544 million as of September 30, from $541 million as of June 30.
Some 10,684 loans are in the portfolio and on a weighted average (WA) basis they have a FICO score of 581, a loan-to-value (LTV) ratio of 101.89% and an annual percentage rate (APR) of 21.75%. The latter is a higher level than ratings analysts at Moody's Investors Servicers have seen on previous transactions.
Wells Fargo Securities leads a group of institutions acting as lead underwriters, which includes Citigroup Global Markets, BNP Paribas Securities, Deutsche Bank Securities, and Santander U.S. Capital Markets.
The underlying loans finance a pool of used cars, and have a WA original term of 72 months, which is slightly higher than it has been on deals going back to 2019, but Moody's did not seem to raise it as a significant potential credit issue. The vast majority of the pool, 83% has a FICO score of less than 650, according to the rating agency.
All of the cars in the collateral pool are used, Moody's said.
