In its seventh overall securitization, Driveway Finance is preparing to sell $329.4 million in asset-backed bonds to investors, secured by revenue from a pool of auto loan contracts that total $375.1 million, through the LAD Auto Receivables Trust 2024-1.
The loans are high quality, according to ratings analysts from Kroll Bond Rating Agency (KBRA), with a weighted average (WA), non-zero credit score of 735, practically the same as the score on the LADAR 2023-4. In fact, the FICO score distribution is a little different to the previous deal. The FICO 741-780 distribution was 20.25%, which was a 2.99% increase in that band from the previous deal, according to KBRA.
Asset Securitization Report's deal database says Citigroup Global Markets and J.P.Morgan Securities are managers on the deal, which had an early February pricing date.
Ratings analysts from Moody's Investors Service say that the trust will issue A, B, C and D notes through seven tranches. The A1 through A4 notes benefit from total initial hard credit enhancement levels of 25.45%; the class B notes get 18.70%; class C notes have 12.60% in credit enhancement and the class D notes benefit from 9.70% in credit enhancement. All of the notes are also covered by a 1.00% reserve fund.
Moody's expects to assign a P1 rating to the A1 notes; Aaa to the A2 through A4 notes; Aa2 to the class B notes; A3 to the class C notes and Baa3 to the class D notes.
All of the underlying loan assets are fixed rate, according to KBRA, and they are financing a lower percentage of new vehicles, 22.8%, than loans from LADAR 2023-4, 26.5%. The loans also have a lower weighted average front-end loan-to-value (LTV) of 95.5%, down from 96.2% and a higher WA coupon of 9.3%, compared with 9.2%. There is also a higher WA seasoning of five months, up from four months.
Interest rate on the collateral and not coupons were 11.01% and 5.87%, respectively on the LADAR 2024-1, and both had dropped slightly from the 11.32% and 6.38% seen on the 2023-4 deal.
