Following up on its premiere term securitization of loan revenues on near-prime auto loans in June, GLS Auto Select Receivables Trust 2023-2 is preparing to sell another batch of asset-backed securities secured from that program, this time for $325.6 million.
Known as GSAR 2023-2, the deal will issue the notes through six classes of notes, made up of three A classes and a B, C and D class, according to ratings analysts at Kroll Bond Rating Agency. New and used cars will secure the loan contracts, according to KBRA, and as of August 31 GLS serviced a portfolio of about 305,147 loans totaling $5.8 billion. Subprime obligors accounted for about 76% of that pool, and near prime represented 24%, according to the rating agency.
GLS Auto will repay the notes—all of which are fixed rate—through a senior-subordinate structure. Note have legal final maturities ranging from Oct. 15, 2024 on the class A notes through Feb. 18, 2031 on the class D notes, according to S&P Global Ratings.
As of the Aug. 29, 2023 statistical calculation date the loans underpinning the GSAR 2023-2 had a weighted average (WA), non-zero FICO score of 684, a WA average interest rate of 16.22% and a WA original and remaining terms of 73 and 72 months, respectively.
The rating agency noted that Global Lending Services originated the underlying loans through its Select Program, a distinct product offering separate from its subprime originations that it launched in October 2021.
At some point the company hopes to become a full-credit spectrum lender, so funding the Select Program is another step toward that, according to ratings analysts at KBRA.
S&P noted that the notes have 33.6%, 28.6%, 21.9% and 16.1% in credit support on classes A, B, C and D, respectively, based on stressed cash flow scenarios. These levels of credit support provide at least 3.70x, 3.12x, 2.39x and 1.78x of its 9.00% expected cumulative net losses on the A, B, C and D, respectively.
S&P will provide 'A-1+' to the A1 notes; 'AAA' to the A2 and A3 notes; 'AA' to the class B notes; 'A' to the class C notes; and 'BBB' to the class D notes. KBRA says it will assign 'K1+' to the A1 notes; 'AAA' to classes A2 and A3; 'AA+' to the class B notes; 'A+' to the class C notes; and 'BBB' to the class D notes.
