CPS readies 3rd subprime auto ABS of year

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Consumer Portfolio Services is readying another $224.8 million of bonds backed by subprime auto loans.

The company, based in Las Vegas, targets borrowers who have had situational credit problems but display both a willingness and ability to pay their obligations, as opposed to bortowers with habitual credit problems, according to rating agency DBRS.

CPS makes loans primarily through dealers, rather than directly to consumers.

Since its inception, the company has purchased over $13.7 billion in contracts and has been a regular issuer in the asset-backed term securitization market, executing 74 transactions representing over $11.8 billion of notes since 1994.

Approximately 90.2% of the statistical collateral pool represents originations from April through June 2017.

The pool has a slightly higher percentage of new vehicles (24.53% vs 22.38%) than the sponsor’s previous deal, and a shorter remaining weighted average term (62 months vs 68 months). But weighted average original term (68 months) annual percentage rate (19 17%) and weighted average loan-to-value ratio (112.85%) and FICO score (567) are virtually unchanged.

Five tranches of note will be issued in the transaction, dubbed CPS Auto Receivables Trust: $105.8 million of Class A notes due in September 2020 with credit enhancement of 55% are provisionally rated AAA by DBRS; there are also a $35 million of Class B notes rated AA, $31.5 million of Class C notes rated A, $27.6 million of Class D notes rated BBB and $25.3 billion of Class E notes rated BB.

The transaction will use prefunding that will be approximately 30% of the closing date bond balance; CPS has 45 days to put this money to work.

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