Stellantis Financial Services is preparing to sponsor a $497.5 million in asset-backed securities (ABS) from the cash flows of a pool of non-prime and subprime auto loans, issuing the debt through the transaction named First Investors Auto Owner Trust, series 2026-1.
The deal has a couple of notable changes from the FIAOT 2025-1 deal, including that SFS accounts for almost all the loans originated in the pool, at 93.77%, up from the 71.78% non-prime retail consumer loans in the FIAOT 2025-1 pool, according to S&P Global Ratings.
The 2026-1 series is also the first asset-backed securities (ABS) deal from the FIAOT shelf to include commercial vehicles originated through the SFS's Captive Program, which extends vehicle financing to small business owners.
Also, the percentage of sub-prime automobile loans originated under First Investors' legacy direct and indirect programs decreased significantly to 3.61% and 2.62%, respectively, from 23.51% and 4.71%, respectively.
Other changes to the pool include a weighted average (WA) FICO score that decreased to 642, from 627, and a WA payment-to-income ratio of 7.68%, which dropped from 10.25% on the 2025-1 series.
FIAOT 2026-1 will issue fixed-rate notes through six tranches of class A through D notes. All senior notes have the same level of credit enhancement, 36.35%.
Subordinate notes, classes B, C and D, benefit from credit enhancement levels 30.35%, 22.35% and 14.00%, respectively, KBRA said.
Also, the legal final maturity dates are April 15, 2027, July 16, 2029, May 15, 2031, July 15, 2032, and April 17, 2034 on classes A1, A2, A3, B and C, and D, respectively, KBRA said.
The deal will repay investors sequentially, where the senior notes receive principal payments in full before the subordinate notes receive payment, KBRA said.
FIAOT 2026-1's structure includes credit boosts such as overcollateralization levels of 13.00%, initially, a non-declining cash reserve account equaling 1.00% of the initial pool balance, and excess spread of 3.85%, KBRA said.
S&P assigns A1+, AAA, AA, A and BBB to classes A1, A2 and A3, B, C and D, respectively. KBRA assigns ratings of K1+, AAA, AA, A and BBB to the A1, A2 and A3, B, C and D notes.
