DriveTime is back with its second subprime auto loan securitization of the year, according to a presale report published by Standard & Poor’s.
The $288 million DT Auto Trust 2014-2 is backed by a larger percentage of loans with original terms greater than 60 months, 85.6% of the loan pool, compared with 82.3% in the issuer’s previous deal, series 2014-1, which was completed in January.
The percentage of remaining terms greater than 60 months has also increased, to 75.1% in the series 2014-2 deal from 63.1%.
However S&P stated in its report that DriveTime's long-term loans have generally performed better its short-term loans because of the tighter underwriting criteria. “Long-term loans are primarily originated in the higher-credit grades, except for repeat customers,” explained S&P.
Deutsche Bank Securities, Wells Fargo Securities, and RBS are the lead underwriters on the latest deal.
S&P has assigned a preliminary AAA’ rating to a $140.43 million class of notes with credit enhancement of 66.1%; to be issued by the trust; a $37.5 million class with credit enhancement of 60.8% is rated AA’; a $54.3 million class with credit enhancement of 51% is rated A’ and a $56.2 million class with credit enhancement of 41.5% is rated BBB.’
The series 2014-2 pool is comprised by approximately $375.02 million in auto loans originated by DriveTime.
S&P noted some slight deterioration in loan composition between this deal and series 2014-1. For example, only 62.53% of loans are in the top three credit grades (DriveTime's best credits); by comparison 65.96% of the series 2014-1 pool was comprised of these credits.
However, the percentage of loan balances associated with an obligor whose FICO is greater than or equal to 600 increased to 15.08% from 14.85% in the series 2014-1 pool.