DriveTime is back with its third auto loan securitization this year, according to Standard & Poor's.
The lender, which targets subprime borrowers, boosted the percentage of borrowers in the deal with credit scores on the high end of its scale from the previous deal. Those with top three grades as scored by DriveTime rose to 64.3% in DT Auto Trust 2015-3 from DT Auto Trust 2015-2.
DT Auto Trust 2015-3 also benefits from an increase in higher FICO-scored borrowers. The sponsor's target borrowers, those with FICO scores of 550 or below, represent 44.49% of the pool. However borrowers with FICO scores greater than 600 increased in the pool to 16.58% from 14.93%. The percentage of loan balances associated with an obligor with no FICO score is approximately 21%, comparable to the previous deal.
The pool has also increased the percentage of longer term loans with original terms of 67-72 months to 54.1% from 48.0%. Long-term loans — those with terms of 61 months and over — are generally riskier than the shorter-term variety because they take longer to pay down. However, the risk is somewhat mitigated by the increase of better borrowers in the pool.
S&P assigned preliminary 'AAA' ratings to $167.62 million of class A notes that are structured with a legal final maturity date of March 2019.
At the subordinate level, the trust will offer $46 million of 'AA' rated, class B notes that are due December 2019; $47 million of 'A' rated class C notes that are due July 2021; and $69 million of 'BBB' rated, class D notes that are due September 2022.
S&P noted in the presale report that the initial credit enhancement at closing for the class A and B notes decreased by 25 basis points and 75 basis points to 64.25% and 54% respectively from 64.5% and 54.75% in the 2015-2 transaction. But credit enhancement increased for the class C and D notes by 375 basis points and 300 basis points to 43.5% and 28%, respectively, from 39.75% and 25%.
Citigroup, is the lead underwiter. Deutsche Bank, Guggenheim and Wells Fargo are co-managers.