Lendbuzz Funding is returning to sponsor a securitization of auto loans extended to borrowers with limited or less than prime credit, and that fund the purchase of a range of automobiles, including light-duty trucks, vans, minivans and sport utility vehicles.
The Lendbuzz Securitization Trust 2023-2 is the sponsor's fourth securitization and will close at the end of the month, according to the Asset Securitization Report's deal database. This is another 144a deal, and will sell $163.2 million in notes through four tranches.
The manager on this deal is unclear, but on previous deals J.P. Morgan Securities and Goldman Sachs did act as managers, according to the ASR database.
Aside from a slightly stepped up frequency—the program started out in 2021 issuing just one securitization a year—Lendbuzz has a much smaller pool balance this time around. Previous pool balances ranged between $206.2 million and $211.7 million, according to a pre-sale report from Kroll Bond Rating Agency. In other changes the loans have a coupon of 14.0% on a weighted average (WA) basis, the highest in the program and one that perhaps reflects the higher interest rate environment.
Another high water mark for the Lendbuzz program is this deal's WA loan-to-value ratio of 98.5%. The deal also has the program's longest WA original term, with 64 months, and some of the lowest seasonings, with just two months. It has the program's highest concentration of new vehicles, at 15.43%, whereas the previous high was 10.74% in the Lendbuzz 2023-1, according to KBRA.
Moody's Investors Service also intends to assign ratings to the notes, and says its key strengths are the buildup of credit enhancement during amortization and the deal's strong backup servicer. The latter might be a plus because Moody's considers the servicer, also Lendbuzz Funding, to be financially weak, potentially affecting the timely repayment of notes.
Some 6,269 loans comprise the collateral pool. In keeping with the company's business model to lend to customers with scant credit histories or weaker credit, 55.5% of obligors have no credit score, and among those who do the WA FICO is 697, according to Moody's.
A reserve fund, overcollateralization, subordination and excess spread all provide credit enhancement to the deal, according to Moody's. The rating agency says it plans to assign an 'A3' to the class A-2 notes and 'Baa3' to the class B, summing up its rating assessment on the deal. KBRA plans to assign 'K1+' to the A-1 notes; 'AA-' to the class A-2 notes; then 'BBB' and 'BB' to the class B and class C notes, respectively.
