Consumer Portfolio Services is preparing its third securitization this year of revenue from subprime auto loan contracts, raising $418.3 million from the capital markets.
The loans primarily finance used automobiles, composed largely of light-duty trucks, vans and minivans, according to ratings analysts at Morningstar | DBRS. This is Consumer Portfolio Services' 56th securitization, which will sell the securities to investors through five tranches of class A, B, C, D and E notes. Maturities range from March 15, 2029 on the class A notes to Feb. 15, 2033.
The rule 144A deal benefits from an initial overcollateralization that represents 3.5% of the original pool balance, according to DBRS.
DBRS notes that
S&P Global Ratings finds that the collateral pool for CPSART 2025-C is essentially the same as the CPSART 2025-B. Also, outstanding performance for the CPSART program, especially the 2022 and 2023 series, was performing worse than its initial or revised expectations.
"The improved collateral characteristics in CPSART 2025-C relative to the series 2022 and 2023 should result in better relative performance," S&P analysts said. Yet this improved performance might end up being marginal, especially if consumers run into difficulty affording their payments, and accounts fall into defaults and have low recovery rates, the rating agency said.
Structurally, hard enhancement increased for classes A, B and C to 58.45%, 45.20% and 28.5%, respectively, up from 57.4%, 44.1% and 8.1%, S&P said.
Overcollateralization, subordination, excess spread and a reserve fund provide credit enhancement for the deal. It does not, however, include a prefunding feature or a cumulative net loss trigger, DBRS said.
S&P assigns AA to the class A senior notes, and then AA, A, and BBB to classes B, C and D, respectively. DBRS assigns AAA, AA, and A to the class A, B and C notes, respectively, and BB and BB to classes D and E, respectively.
