Exeter Automobile Receivables Trust (EART), 2023-3 is preparing to market $587.5 million in asset-backed bonds backed by a pool of vehicle loans extended to subprime borrowers—although the pool does have the highest concentration of new cars seen over a two-year period.
New cars comprise 2.39% of the collateral pool, about 131 percentage points higher than the 1.08% seen in EART 2023-2, the previous transaction, according to ratings analysts at Fitch Ratings. This is the highest concentration dating back to EART 2022-5 pool, Fitch said.
The deal's sponsor is Exeter Finance, which also originated the loans, sold them into the trust, is custodian of the assets, and will service the outstanding notes, according to S&P Global Ratings. Irving, Texas-based Exeter also assembled loans with underlying borrowers that have a weighted average (WA) FICO score of 575, up from 571, Fitch noted. Based on Exeter's proprietary approval system, the loans have a WA credit score of 247, up from 245 on EART 2023-2.
Citigroup Global Markets is the lead underwriter on this transaction, although it is not clear which companies are managers on this issuance from the EART platform. On previous deals, banks including Barclays, Deutsche Bank and Wells Fargo have served as managers, according to the Asset Securitization Report's deal database.
The deal has a number of structural changes from the EART 2023-2, according to S&P, with initial hard credit enhancements ranging from 62.65% on the class A notes to 21.30% on the class D notes on the EART 2023-3. This compares with 62.60% through 19.05% on the EART 2023-2.
S&P expects to assign 'A-1+' to the A-1 notes; 'AAA' to the A-2 and A-3 notes; 'AA' and 'A' on the classes B and C notes; and 'BBB' and 'BB' on classes D and E notes.
Fitch says it plans to assign 'F1+' to the 'A-1' notes; 'AAA' to the classes A-2 and A-3 notes; 'AA' and 'A' to classes B and C; and 'BBB' and 'BB' to the classes D and E notes. All of the notes are fixed rate, and have legal final maturity dates of July 15, 2024 through January 15, 2031.
