First Investors plans to issue $210 million of subprime auto loan securities from its second deal this year.
The transaction, called First Investors Auto Owner Trust 2015-2, will offer seven tranches of notes. Kroll has assigned preliminary ratings of AAA’ to the class A-1 and class A-2 notes maturing in December 2019 and September 2021 respectively. Both tranches benefit from credit enhancement of 24.75%.
For the first time, the capital structure includes four subordinate tranches; in addition to class B, C, and D notes, there is a tranche of class E notes.
The class B and class C notes, both due September 2021, have preliminary AA’ and A’ ratings, respectively. The class B notes are structured with credit support at 19.9% and the class C notes benefit from 12.3%. Also offered are BBB’ rated class D notes, due December 2021 that benefit from 5.95% credit enhancement.
The class E notes will be rated ’BB’, are due November 2022 and benefit from just 1.50% credit enhancement.
The credit enhancement for the class A notes is unchanged from First Investors' previous deal, but support for of all the other classes has risen.
In the 2015-1 transaction, completed in April, the class B notes have 17.5% credit support, the class C notes at 9.45% support, and the class D notes 2.11%.
First Investors is also introducing a prefunding account of up to $42.1 million, which is approximately 20% of the receivables. At closing, the transaction contains $168.4 million of receivables. The prefunding period is three months but is expected to be completed well in advance of the three months based on current origination volume.
Loan terms average 70 months, in line with the issuer’s previous transaction, and 26.16% of the pool is comprised of of loans on new cars and 73.84% of loans on used cars. Borrower credit scores are in line with previous deals with an average FICO of 583.
The issuer has over 26 years of experience in originating and servicing nonprime and subprime auto loans. Its managed portfolio is $1.15 billion as of April 31, 2015 and has increased 22% since April 30, 2014.