Exeter Finance Corp. and Westlake Services are planning to issue a total of $775 million of securities backed by subprime auto loans, according to rating agency presale reports.

Exeter $500 million in securities backed by deep subprime auto loans, The $500 million Exeter Automobile Receivables Trust 2014-2 is the sponsor’s second securitization of the year. It was last in the market in January.

The current deal will offer $317.7 million of class A notes with a preliminary ‘AAA’ rating from DBRS, $72.9 million of class B, ‘A’-rated notes, $53.4 million of class C, ‘BBB’ rated notes and $56 million of class D, ‘BB’-rated notes, .

The class A notes benefit from credit enhancement at 41%, the class B notes have credit enhancement at 27%, the class C notes at 16.75% and the class D notes at 6%.

Citigroup and Wells Fargo are the lead managers on the deal.

A pool of subprime loans secured by new and used automobiles, light duty trucks, minivans and sport utility vehicles backs the notes. The collateral has a weighted-average seasoning of approximately three months and contains loans originations between the second quarter of 2010 and the second quarter of 2014; however the majority of loans, approximately 79% were originated since the beginning of the first quarter of 2014. The average remaining term of the collateral pool is approximately 66 months. The weighted-average FICO score of the pool is 570.

By comparison, the pool of loans backing Exeter's previous securitization had a slightly lower weighted average FICO score of 568.

Exeter was acquired by Blackstone in 2011, but Navigation Capital Partners, Goldman Sachs Vintage Fund and the Exeter management team retain minority interests in the company.

As of March 31, 2014, Exeter serviced a portfolio of approximately 138,000 automobile loan contracts with an aggregate outstanding balance of approximately $2.22 billion. This represents a 103% year-over-year growth rate for the managed portfolio.

The $275 million Automobile Receivables-Backed Notes Series 2014-1 is Westlake’s first deal of 2014. On offer are $97.3 million of money market notes with a preliminary ‘A-1’ rating from Standard & Poor’s, $99.6 million of two-year notes with an ‘AAA’ rating, $22.6 million of 2.5-year notes with an ‘AA’ rating, $29.1 million of notes with an ‘A’ rating and $26.2 million of notes with a ‘BBB+’ rating.

JP Morgan Securities is the underwriter.

The deal is Westlake’s fifth securitization. Compared with the previous deal, completed in 2013, the collateral backing this deal has a higher weighted average loan to value of 104.41%, versus 101.37%; the percentage of receivables with an original term of 49-72 months has also increased to 17.20% from 7.64%, and the percentage of borrowers with a FICO score of 660 and above increased to 10.9% from 9.8%, according to S&P.

The rating agency has increased its expected cumulative net loss range for the transaction to 11%-12% from 10%-11% on the 2013-1 transaction because losses on Westlake's managed portfolio are trending higher.


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