Ent Credit Union is preparing to issue $243 million in asset-backed bonds secured by revenues from prime auto loans, and it is the first auto securitization for the issuer.
The 144a securitization will issue the notes through a senior-subordinate structure of seven classes of notes, according to ratings analysts from Moody's Investors Service and S&P Global Ratings. Wells Fargo Securities and BMO Capital markets are lead underwriters on the deal, according to Moody's.
The most senior class of notes, A1, has total initial hard credit enhancement that amounts to 87.7%. In the rest of the deal the A2, A3, A4 notes have total enhancement totaling 51.01%, 26.93%, 13.60% and 11.15%, respectively. Classes B, C and D benefit from levels totaling 11.15%, 8.05% and 4.50%, respectively.
ENT 2023-1 is slated to close by September 29, S&P said. The notes may also benefit from excess spread, and Moody's expects enhancement to build up in the pool as the notes amortize.
Moody's notes that Ent has a long track record servicing auto loans, albeit from a small platform, the company said. In another potential credit strength the collateral pool consists of prime quality loans originated through dealer channels by Ent. On a weighted average (WA) basis, the loan obligors have a FICO score of 733, with a minimum of 660, the rating agency said.
While Ent's history as a servicer is a plus, it is still unrated, and this introduces a level of uncertainty in the transaction, Moody's said. The pool also features a high percentage of longer-term loans, the rating agency said.
Moody's will assign 'P-1' to the A1 class of notes; 'Aaa' to classes A2 through B; 'Aa1' to the class C notes and 'A1' to class D. S&P, meanwhile, will assign 'A-1' to the class A1 notes; 'AAA' to classes A2 through A4; 'AA+' to class B; 'A+' to class C; and 'BBB' to class D.
All of the notes are fixed and have legal final final maturities that range from Oct. 15, 2024 through March 17, 2031.
