A pool of auto loans extended to subprime borrowers will secure $239.7 million in securitized bonds, in a deal sponsored by First Help Financial.
FHF Issuer Trust, series 2025-1, will issue five tranches of class A, B, C and D, according to Kroll Bond Rating Agency. The notes rated K1+ and AAA benefit from initial credit enhancement representing 25.4% of the outstanding note balance.
Otherwise, the class B and C notes, rated AA and A, respectively, benefit from 21.0% and 13.4% in initial credit enhancement, respectively, KBRA said. Class D has 7.0% in credit enhancement.
Additionally, the notes benefit from overcollateralization representing 6.0% of the sum of the aggregate principal balance, and that could build to 6.50% of the receivables' principal balance, KBRA said. This exceeded the O/C levels seen in every other transaction the trust brought to market since the 2023-2 series.
Subordination, excess spread of about 11.59%, and a non-declining cash reserve account that equals 1.00% of the initial receivables, KBRA said. The rating agency says it expects a base case, cumulative net loss of 8.50%.
First Help Financial targets customers who are generally unable to get financing from traditional lending sources, KBRA said. It sources almost all its loans—most recently 96% in 2024—from franchise dealers. Otherwise, independent dealers also provide loans to FHF's management pool.
As of Jan. 17, 2025, the collateral loans had a non-zero, weighted average (WA) FICO score of 666, and a significant percentage of the underlying borrowers, about 41.7%, did not have a credit score. On average, the loans have a balance of $32,644.10, a WA interest rate of 19.02%, and remaining term of 67 months, KBRA said.
In terms of geographic concentration, Texas accounts for the largest share of the pool balance, at 15.0%, followed by Florida and California, with 9.5% and 6.9%, respectively.
