A pool of fixed-rate auto loans originated to predominantly prime obligors will secure $409 million in asset-backed securities (ABS).
LAD Auto Receivables Trust, series 2024-2, will issue the notes through seven tranches of classes A, B, C and D notes, according to ratings analysts from Kroll Bond Rating Agency. Notes are expected to experience a lifetime cumulative net losses of 5.10% on the higher FICO segments, down 0.35% from the series 2024-1 transaction, according to KBRA.
Driveway Finance is the deal's sponsor, servicer and custodian, according to KBRA. All the class A notes benefit from 22.50% in initial credit enhancement. This includes 3.30% in annual gross excess spread, which was down 0.31% from the previous deal. Otherwise, the class B, C and D notes benefit from 17.20%, 12.60% and 8.00% in credit enhancement, respectively. Classes B and D saw reductions in total credit enhancement.
LAD Auto 2024-2 will follow a sequential, senior-subordinate repayment structure, KBRA said, where the class A1 notes will be repaid first. Once the A1 notes are repaid in full, the rest of the notes will receive repayment, the rating agency said.
Subordination, overcollateralization, yield supplement overcollateralization, a cash reserve account and excess spread make up the rest of the total credit enhancement structure, according to KBRA.
As for asset characteristics, the loans have an average current principal balance of $27,063, a WA coupon of 10.1% and they have a weighted average (WA), non-zero credit score of 732. Also, the loans have a weighted average original term and remaining term of 72 and 67 months, respectively, KBRA said.
KBRA did express some concern about the limited data on Driveway Finance's static pool, KBRA said. Not is performance data limited to just 45 months beginning in May 2020, but the portfolios included no vintages that completed a full loss cycle.
The notes have legal final maturity dates that range from June 16, 2025 on the A1 notes through Oct. 15, 2031 on the class D notes.
KBRA assigns ratings of K1+ to the A1 notes; AAA to the A2 through A4 notes; AA to the class B notes; A to the class C notes and BBB to the class D notes.
