GLS Auto Select Receivables Trust 2024-3 (GSAR 2024-3) comprises five classes of notes and the expected closing date is July 8, 2024. The capital structure includes overcollateralization representing 3% of the initial pool balance and a senior-subordinated sequential-pay structure in which the senior-most notes outstanding are paid first.
Moody's Ratings says the class A-1 and A-2 notes have total initial hard credit enhancement of 27.1%. The class B, C and D notes have credit enhancement of 21.15%, 12.55%, and 4%, respectively. Moody's says the hard credit enhancement comprises a combination of overcollateralization, a non-declining reserve account, and subordination. The notes may also benefit from excess spread.
Global Lending Services is acting as originator, sponsor, servicer and custodian for the deal. The lead underwriters are BMO Capital Markets, Citigroup Global Markets and Deutsche Bank Securities, according to the Asset Securitization Report deal database.
According to Moody's, the transaction's key credit strengths include GLS's experience as a sponsor and servicer and its experienced management, the collateral pool's stronger credit quality compared to GLS's recent prime pools, and buildup of enhancement to the notes as the pool amortizes. The credit challenges include a servicer with low durability, limited performance history, a servicing fee below market rate, and the impact of declining used car prices.
S&P Global Ratings says the transaction is backed by a pool of fixed-rate retail non-prime automobile loan contracts secured by new and used automobiles, light-duty trucks, minivans, and sport utility vehicles purchased by borrowers who generally have credit bureau scores ranging from 620 to 800.
The total securitized portfolio amount is $191.63 million, comprising 6,999 obligors with an average principal balance of $27,380 and an APR of 15.9%. The pool's weighted average non-zero FICO score is 695 and its eScore is 767.
Moody's categorizes the loans as prime and says that non-prime pools are characterized as being backed by loans with a weighted average obligor FICO of less than or equal to 660.
According to Moody's, compared with other transactions from other issuers with similar collateral characteristics, the GSAR 2024-3 pool has a relatively higher weighted average non-zero FICO score, a greater percentage of used vehicles, less seasoning, and comparable original term. Compared with prior GSAR pools, the 2024-3 pool has slightly higher WA FICO, eScore, and APR, Moody's says.
S&P has assigned preliminary ratings of A-1+ to the class A-1 notes, AAA to the class A-2 notes, AA to the class B notes, A to the class C notes and BBB to the class D notes.
Moody's has assigned provisional ratings of P-1 to the class A-notes, AAA to the class A-2 notes, AA2 to the class B notes and A2 to the class C notes. It didn't rate the class D notes.
