Global Lending Services sponsors $594.4 million in auto ABS

A pool of non-prime auto loans will provide collateral for $594.4 million in asset-backed securities from the GLS Auto Receivables Issuer Trust, 2024-3.

Global Lending Services originated the auto loans in the collateral pool, will service them, and is the deal sponsor, according to Moody's Ratings. The trust will issue fixed-rate notes through seven tranches of classes A, B, C, D and E notes, according to ratings analysts at S&P Global Ratings and Moody's Ratings.

The GCAR 2024-3 has several key differences from the GCAR 2024-2 deal. The current transaction's notes have increased excess spread, as well as some structural optimization by the issuer, S&P said, which helps account for lower total initial hard credit enhancement levels for all classes of notes. Total enhancement came to 54.2%, 39.3%, 25.3%, 12.2% and 6.0%, on the classes A, B, C, D and E notes, respectively. That represents a decrease from 55.0%, 40.3%, 26.7%, 14.5% and 6.6% on the same classes, respectively, S&P said.

Initial overcollateralization also decreased, dropping to 5.0% of the initial collateral pool balance from 5.6%, S&P said. It will grow to a target of 9.7%, down from a previous target of 10.7%.

The notes also benefit from a reserve fund representing 1.0% of the pool balance, S&P said.

BMO Capital markets, Citigroup Global Markets, Deutsche Bank Securities, Goldman Sachs and JPMorgan Securities are managers on the deal, according to the Asset Securitization Resort's deal database. Also, yields are expected to range from 5.4% on the notes rated P1/A1+ (Moody's and S&P, respectively) to 5.6% on the Baa3/BBB rated notes. All notes are benchmarked to the three-month, interpolated yield curve, the database said.

Moody's said the notes, which will repay investors through a senior-subordinate structure, have legal final maturity dates ranging from Aug. 15, 2025 on the A1 notes through June 16, 2031. The rating agency also noted that the current deal has a stronger credit quality compared with prior GCAR deals. The current pool, Moody's analysts said, only includes loans that have made at least one payment. Borrowers on the underlying loans have a FICO score of 587, on a weighted average (WA) basis, according to Moody's.

Also, most of the pool, which contains 26,408 contracts or obligors, is composed of used vehicles (87%), Moody's said.

Moody's assigns ratings of Aaa to the A2 and A3 notes; and Aa1, Aa3, and Baa3 to the classes B, C and D notes, respectively. S&P assigns ratings of AAA to the A2 and A3 notes; and AA, A, BBB and BB to the classes B, C, D and E notes, respectively.