Global Lending Service's latest securitization, and the first 144a deal of 2026, will raise $225.3 million, supported by a pool of prime auto loans.
The current pool, composed of 7,118 contracts, is an example of recently improved performance, according to analysts. Securitized transactions from 2024 are performing better than deals issued in 2023, according to Moody's Ratings.
The company added that deals from 2024 and 2025 are performing well within initial expectations, Moody's said. This trend also applies to GLS's managed portfolio.
The deal, GLS Auto Select Receivables Issuer Trust 2026-1, is slated to close on January 15, according to Moody's. The deal is expected to issue notes through five tranches of fixed-rate notes, according to S&P Global Ratings.
Credit enhancement levels of 31.6% on the A1 and A2 notes, and 26.8%, 20.6%, and 15.4% on the B, C and D notes, respectively, according to S&P.
The rating agency noted several structural changes to GSAR 2026-1, compared with GSAR 2025-4. Total hard credit enhancement for the A, B, C and D classes was 24.15%, 18.20%, 10.25% and 2.40%, respectively. Those levels decreased from 25.7%, 19.8%, 11.0% and 4.40%, respectively.
The current deal does benefit from lower initial overcollateralization, 1.40%, down 3.25%, and is expected to grow to a target of 5.00% of the current pool balance, plus 1.50% of the initial pool balance.
Moody's puts its cumulative net loss (CNL) expectation for the GSAR 2026-1 at 8.50% and the loss at the Aaa stress is 34.0%, which is the same as the previous transaction.
Among the deal's credit strengths is GLS's experience as a securitization sponsor and a car loan servicer, with a portfolio that amounts to $9.8 billion of auto loans.
GSAR 2026-1, however, does have several credit challenges. The servicing fee, for one, is 1.50% of the outstanding pool balance, and that is considered below market rate. This raises the possibility that they servicing fee for a successor servicer could be higher than the original servicing fee, Moody's said.
There is also a risk that used car prices could decline, Moody's said, which is punctuated by the fact that 79% of the pool is composed of loans on used vehicles.
Moody's assigns P1 to the A1 tranche; Aaa to the A2 tranche; Aa2 to the class B tranche and A2 to the class C notes. S&P assigns A1+ to the A1 class; AAA to the A2 class; AA to the class B notes; and A and BBB to tranches C and D, respectively.
