Revenue from a pool of non-prime auto receivables will secure $250.7 million in asset-backed securities (ABS) coming to market from the GLS Auto Select Receivables Trust, 2025-3.
The deal, sponsored by Global Lending Services, will issue notes to investors through five tranches, including two class A notes that benefit from total hard credit enhancement of 33.9%, according to analysts at S&P Global Ratings, which added that the B, C and D tranches have available hard credit enhancement amounting to 28.5%, 22.0% and 16.0% respectively.
The A1 and A2 senior tranches have legal final maturity dates of June 15, 2026 and Oct. 10, 2030, respectively, according to S&P and Moody's Ratings, which also rated the deal. Classes B and C mature on Sept. 15, 2031, while the class D notes have a legal final maturity of Oct. 15, 2032, the rating agencies said.
GLS Auto Select Receivables Issuer Trust, 2025-3, will issue fixed rate notes, according to S&P.
BMO Capital Markets, Wells Frago Securities and Goldman Sachs are managers on the deal, which closes on July 3, according to the Asset Securitization Report's deal database.
Moody's points to several credit strengths of the deal, including that GLS is an experienced sponsor and servicer, with a managed portfolio of $8.3 billion in prime auto loans, and having completed more than 35 ABS transactions.
Although the collateral is described as non-prime, Moody's points to several strong credit characteristics, including an average non-zero FICO score of 697 and an eScore of 768. The current collateral pool also has a lower ratio of used cars.
At closing, the pool benefited from overcollateralization of 3.40% of the initial pool balance, and that is expected to rise to a target of 5.50%. There is also a fully funded, non-declining reserve account that equals 1.00% of the initial pool balance. The notes have annual excess spread of about 8.32%, Moody's said.
Despite all the deal's positive attributes, there are some credit challenges. For one, GLS is considered a low durability servicer, giving the expected loss scenario additional variability. Also, the GSAR program goes back to the fourth quarter of 2021, limiting performance data to the seven deals from 2023.
Most of the collateral pool is composed of used cars, 79%, which exposes the portfolio to lower recovery rates.
Moody's assigns ratings of P1 and Aaa to the A1 and A2 tranches, respectively, and Aa2 and A2 to the B and C tranches. S&P assigned A1+ and AAA to the A1 and A2 tranches, respectively; AA, A and BBB- to classes B, C and D notes.
