Carvana is preparing to sponsor $638.6 million in asset-backed securities (ABS) backed by payments on prime retail installment auto loan contracts, issued through the Carvana Auto Receivables Trust, 2024-P3.
The transaction, CRVNA 2024-P3, will issue notes through eight tranches of classes A through N notes. Legal final maturity dates on the dates range from Oct. 10, 2025 to Sept. 10, 2032 for the notes rated P1 through Ba1, by Moody's Ratings, respectively.
Carvana's strengths include an experienced third-party servicer, Bridgecrest Credit, which is a subsidiary of DriveTime Automotive Group, Moody's said. The company has more than 30 years of experience in the business of servicing loans, with a portfolio of about $18 billion. Also, CRVNA 2024-P3's notes are all fixed rate, and will be backed by prime-quality auto loans, S&P Global Ratings said.
Santander US Capital Markets, BNP Paribas Securities and
The transaction will repay noteholders on a senior-subordinate basis, the rating agencies said. Moody's says the notes benefit from total initial hard credit enhancement that represents 8.0% of the pool balance on the class A notes. Classes B, C, D and N benefit from credit enhancement levels representing 5.40%, 2.20%, 0.50% and 0.25%, respectively, of the pool balance. There is also a reserve fund equaling 0.50% of the pool balance on all the notes.
The strength of the servicer helps offset some potential credit risks in the deal, including a financially weak sponsor, at least as Moody's sees it, which had seen its profitability weaken in 2022 and 2023. Moody's also noted that origination vintages from 2022 and early 2023 had shown weaker performances compared with the loans from earlier years.
As for the underlying 26,064 contracts in CRVNA 2024-P3, borrowers have a weighted average (WA) FICO score of 701, a WA loan-to-value ratio of 93.8% and a 71-mnth remaining term.
Moody's assigns Aaa to the A2 through A4 notes; Aa2 to the class B notes; A2 to the class C notes; Baa1 to the class D notes and Ba1 to the N class. S&P 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 class N notes.
