DriveTime prepares to issue at least $573.7 million in auto ABS

DriveTime Automotive Group is returning to the securitization market to raise $573.7 million in asset-backed securities, which can be upsized to $680 million, through the Bridgecrest Lending Auto Securitization Trust, series 2024-3.

It will be the latest in a long series of securitizations from DriveTime, a leading used vehicle retailer that primarily serves subprime borrowers, according to ratings analysts at Kroll Bond Rating Agency. It will be the fourth public offering, registered by the Securities and Exchange Commission, however, that is composed of auto loans that Bridgecrest Acceptance services.

Known at BLAST 2024-3, the deal will issue five classes of notes with subprime auto loans serving as collateral, regardless of whether the pool is the base amount or upsized, KBRA said. Also, each structure will repay investors sequentially, with initial credit support in the form of initial overcollateralization of 15.0%, which could build to a target of 20.0%, and is subject to a 3.25% floor. Excess spread (12.02%), subordination and a 1.50% reserve account funded at closing.

Legal final maturity dates range from Aug. 15, 2025 on the A1 notes through April 15, 2031 on the subordinate class E notes, according to ratings analysts from S&P Global Ratings.

The deal comes to market amid a period of a challenged corporate environment. At yearend Dec. 31, 2023, Drivetime reported a net loss of $69.3 million, compared with a net income of $39.3 million for the year ended Dec. 31, 2022, KBRA said. Costs and expenses related to vehicle cost of sales saw a $219.4 million increase, and a $70.1 million increase in interest expense, among other factors.

As for DriveTime's debt and financing facilities, Wells Fargo (which is the bank account provider on this deal), Citigroup, Deutsche Bank and Fifth Third provided a $1.1 billion in warehouse facilities as of yearend 2023, among other provisions. Each facility includes provisions to amortize the outstanding debt on the maturity date to the extent that drawings are outstanding, KBRA said.

DriveTime and GoFi focus on lower quality subprime obligors with a non-zero weighted average FICO score of 554. Also, on a weighted average (WA) basis, the pool has a current balance of $19,978 and an original term of 71 months, with 67 months remaining.

KBRA assigns ratings of K1+ and AAA to the A1 and A2 and A3 notes, respectively; AA to the class B notes; A to the class C notes; BBB- to the class D; and BB- to the class E notes.