Flagship Credit Acceptance added to the line-up of subprime auto loan securitizations this week with the $266 million Flagship Credit Auto Trust 2014-1 deal.

Wells Fargo Securities is lead underwriter on the deal.

The deal will offer $193.42 million of fixed–rate notes that Standard & Poor’s expects to rate ‘AA’.  The notes are backed by retail subprime auto loans, with 80% on used vehicles. The pool includes a greater number of military auto loan contracts (15.06%) than the issuer's 2013-2 pool where th loans made up 14.67% of the pool.

Four subordinate tranches will be offered: $32.42 million of ‘A’ rated, class B notes; $23.77 million of ‘BBB’-rated, class C notes; $9.08 million of ‘BB’ rated , class D notes; and $7.4 million of ‘BB-’ rated, class E notes. The notes are structured with credit enhancement of 40.2%, 31.5%, 25.1%, 22.2% and 19.0% for the class A, B, C, D, and E notes respectively,

This is the company's fourth transaction in two years. There are some changes to the deal’s capital structure from the issuer’s last transaction, the 2013-2 deal. FCAT 2014-1 features class E notes, which provide additional subordination for the more senior classes.

The initial credit enhancement increased across the capital structure. For example, an increase in the initial hard credit enhancement for the class A notes to 30.76% from 24.79%, means S&P expects to rate the senior notes on this latest deal one notch above the class A notes structured under 2013-2.  The deal is expected to close April 17.

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