Global Lending Services (GLS) is preparing to launch a transaction that will raise $344.7 million in securitized bonds, repaid from a pool of near-prime auto loan contracts on a range of vehicles, including light-duty trucks, minivans and vans.
The 144A transaction will issue five tranches of class A, B, C, and D notes, with maturity dates ranging from Oct. 15, 2025, through Oct. 15, 2031, according to ratings analysts at Moody's Ratings.
GLS takes on several key roles in the deal, including sponsor, originator, seller and servicer, the rating agencies said. Moody's, meanwhile, notes that
Moody's notes that the notes benefit from total initial hard credit enhancement, with 26.4% on both class A tranches; 20.3% on the class B notes; 11.7% on the class C tranche; and 3.60% on the class D notes. Also, all the notes benefit from a reserve fund representing 1.00% of the pool balance.
Further, the notes benefit from overcollateralization of 2.60% of the initial pool balance. Subordination and a sequential payment priority will cause enhancement to be built up in the transaction, with overcollateralization reaching 4.5% of the pool balance as the notes amortize. On an annualized basis, the deal will also have excess spread of about 8.48%.
There are 7,508 contracts and obligors in the asset pool, according to Moody's, and used vehicles account for much of that, 80%. Of the remaining new vehicles, 91.4% of those were purchased from franchise dealers, Morningstar DBRS said. While Moody's considers the underlying assets prime, DBRS describes them as near prime, the rating agencies said.
On a weighted average (WA) basis, the loans have a FICO score of 698, loan-to-value (LTV) ratio of 119%, and an annual percentage rate (APR) of 15.24%. Moody's points out that the assets in GSAR 2024-4 have a stronger credit profile compared with recent GLS prime pools. Aside from the FICO score, the loans have a WA non-zero eScore of 771, from its proprietary credit scoring model.
As for credit challenges, Moody's says GLS has low durability as servicer, which means loss scenarios are more variable. Also, GLS might be less able to mitigate losses not related to the collateral pool, hindering its ability to protect securitization bondholders.
Moody's assigns ratings of P1 to the A1 notes; Aaa to the A1 notes; Aa2 to the class B notes and A3 to the class C notes. DBRS assigns R1 to the A1 notes; AAA to the class A2 notes; AA to the class B notes; A to the class Cs; and BBB to the class D notes.
