Exeter Finance Corp. priced an upsized offering of securities backed by subprime auto loans this week.
The $550 million Exeter Auto Receivables Trust 2015-2 was increased by $100 million from $450 million originally, the company said in a press release.
The $360.94 million senior class A notes with weighted average life of 1.07 years have a coupon of 1.54%; they are rated AAA’ by DBRS and AA’ by Standard & Poor's.
The $75.62 million class B notes with a WAL of 2.85 years and a single-A rating from both rating agencies have a coupon of 2.65%.
The $58.73 million c notes with a WAL of 3.60 years and a triple-B rating have a coupon of 3.90%.
The $54.71 million class D notes with a WAL of 4.07 years and a double-B rating have a coupon of 5.79%.
The transaction is expected to close on Wednesday, May 20.
"This transaction was met with strong investor demand and demonstrated significant oversubscription levels, which allowed Exeter to upsize the transaction from $450 million to $550 million while improving overall pricing," Andrew Kang, Exeter’s senior vice president and treasurer, said in a press release.
Deutsche Bank Securities and Citigroup acted as joint book runners on the transaction, with Barclays, J.P. Morgan and Wells Fargo Securities participating as co-managers.
Exeter, which is headquartered in Irving, Texas, is majority owned by the Blackstone Group and originates auto loans indirectly through franchised and independent dealerships
Exeter’s 2015-2 transaction, its second so far this year, is structured with less overall credit support at both the senior and subordinate levels compared to its 2015-1 transaction, completed in February. The class A in the 2015-2 deal has 33% credit support compared to 34% in the 2015-1 transaction, the class B notes have 19.8% subordination compared to 20.5% ; however credits support for the class C notes was upped to 9.55% from 9.3%.
Lower credit support isn’t the only change that increases the risk in the 2015-2 transaction; the deal is also backed by a higher percentage of loans without a FICO score, 3.77% vs 3.02%. Also on the rise is the percentage of loans financing used cars, to 83.1% of the pool from 80.6% of the pool. The weighted average seasoning of the loans decreased, to 2 months from 3.6 months.
The loans in the latest deal have a lower weighted average loan to value ratio of 112.6% vs 113.26%, and the weighted average FICO of the pool increase slightly to 569 from 567. The percentage of loans with a FICO of less than 540 (considered deep subprime) decreased to 25.83% of the pool from 27.3%.