CPS Auto Receivables Trust 2023-B is preparing to issue $291.7 million in auto asset-backed securities (ABS), secured by a pool of subprime loan receivables. The pool consists primarily of loans for used automobiles, light-duty trucks, vans, and minivans.
The CPSART 2023-C transaction, the 49th securitization since 2010 by
The seller is CPS Receivables Five, with Consumer Portfolio Services acting as sponsor and servicer for the transaction, which closes on July 25. The backup servicer is Computershare Trust Company. Five classes of notes are to be issued, with legal maturity dates ranging from September 2026 to February 2031.
Founded in 1991, CPS maintains relationships with franchised auto dealers and select independent dealers, providing auto loans to U.S. consumers with limited access to traditional financing sources. CPS targets borrowers who have situational credit problems, but display an ability to pay their obligations, compared with borrowers with habitual credit problems, DBRS says.
Up to March 31, 2023, CPS had purchased around $20.4 billion in contracts and issued regularly in the term ABS market. It had issued $17.9 billion of term asset-backed securities across 96 transactions from 1994 through January 2023.
According to DBRS, CPS's senior management team has considerable experience and a successful track record in the auto finance industry, managing the company through multiple economic cycles.
The collateral pool for CPSART 2023-C was $312.68 million as of June 30, 2023, with an average principal balance of $19,115, a weighted-average annual percentage rate of 21.33%, a remaining term of 65.99 months, FICO score of 586, and loan-to-value (LTV) of 118.80. The APR, remaining term, and LTV are comparable to April 2023's 2023-B. However, the collateral pool for 2023-B was higher at $369.8 million, with lower average principal balance of $17,998 and FICO score of 577.
S&P Global Ratings says the percentage of loans originated in CPS's top five credit tiers increased to 82.58% in CPSART 2023-C's final cutoff pool from 78.28% in the closing collateral pool for January 2023's CPSART 2023-A. The percentage of loans for new vehicles decreased to 6.65% from 6.81%.
CPSART 2023-C incorporates a senior-subordinated, sequential payment structure, providing initial overcollateralization of 6.70%, S&P says.
DBRS says the class A notes have initial hard credit enhancement of 58.15%, while the initial enhancement for the class B, C, D and E notes is 45.3%, 28.95%, 17.7% and 7.7% respectively. Its cumulative net loss assumption is 15.85% for the transaction based on the expected pool composition.
DBRS has provisionally assigned AAA to the class A notes, AA to the class B notes, A to the class C notes, BBB to the class D notes, and BB to the class E notes. S&P has provisionally assigned the same ratings to the class A, B, C and D notes, but didn't rate the class E notes.
