The Flagship Credit Auto Trust program is returning to raise $350 million from the asset-backed securities market, with a smaller percentage of loans originated through its indirect program.
Initial credit enhancement levels on all of FCAT 2023-3's classes of notes are a little lower compared with FCAT 2023-2, according to ratings analysts from Kroll Bond Rating Agency. Total gross excess spread also ticket down on the deal, coming in at 11.16%, compared with 11.22% on the FCAT 2023-2.
This is also the first deal to hit the securitization market after Flagship made changes to its servicing system. As part of the transition, Flagship said it experienced some interruptions in its servicing capabilities, including the fact that some information processing systems experienced reduced functionality.
Many aspects of the collateral pool resemble those of the previous deal, FCAT 2023-2. The underlying loans have an average balance of $25,853, which is in line with balances on previous deals, according to KBRA. On a weighted average (WA) basis, the deal's loan-to-value on FCAT 2023-3 was 119.4%, an average FICO score of 588, and an average annual percentage rate of 20.73%.
Also on a WA basis, the underlying loans had a remaining 69 months, with an average seasoning of two months. Geographically, Texas accounts for 19.2% of the borrower locales, followed by Florida, with 8.07% and California, with 6.53%.
KBRA noted that the transaction has a sequential pay structure, and that the deal has an initial overcollateralization level of 0.50%, which will increase to 4.85% of the current pool balance, with a floor of 1.0% of the initial pool balance.
Subordination and a cash reserve account also shore up the credit to the notes, according to the rating agency.
KBRA expects to assign a rating of 'K1+'; 'AAA' to the A2 and A3 notes; 'AA+' to the class B notes; 'A+' to the class C; 'BBB+' to the class D and 'BB+' to the class E notes. S&P Global Ratings will also assign ratings to the notes; with 'A-1+' to the A-1 notes; 'AAA' to the A2 and A3 notes; 'AA' to the class B notes; 'A' to the class C notes; 'BBB' to the class D notes and 'BB-'.
