A pool of direct and indirect prime-quality motor vehicle loans and retail installment contracts will secure $266.6 million in fixed-rate, asset backed bonds expected from the OCCU Auto Receivables Trust 2023-1, its second auto ABS transaction.
The Oregon Community Credit Union is sponsoring the deal, OCCU 2023-1, which will come to market as a 144a transaction, and have higher levels of credit enhancement across several measures. New and used vehicles secure the deal, according to ratings analysts at Moody's Investors Service and S&P Global Ratings. The structure has a yield supplement overcollateralization amount (YSOA) of 10.14%, compared with 8.50% on the OCCU 2022-1 deal, S&P said.
Classes A, B, C and D all benefit from total initial hard credit enhancement levels of 14.94%, 11.19%, 7.63% and 3.50%, respectively, which is higher than the levels seen on the OCCU 2023-1 deal. On the same classes those came in at 12.28%, 7.66%, 4.14% and 1.13%. Excess spread is 3.32%, up from 1.76%, the rating agency said.
One key decrease was in the reserve account, which amounts to 0.25% of the adjusted cutoff date pool balance, down from 0.63% on the 2022-1 series.
BofA Securities and Stifel Nicholaus & Co. are lead underwriters on the deal, according to the rating agencies.
Collateral pool characteristics have seen a few notable changes as well, such as higher concentrations in two states—Oregon and Washington, says Moody's.
Also, the 2023-1 deal's underlying contracts have a weighted average (WA) term of 79 months, which is higher than the 2022-1 pool. Seasoning is nine months, longer than the two months of seasoning seen on the 2022-1 deal, which would seem to help to counteract any potential negative.
The notes have legal final maturity dates ranging from Sept. 16, 2024 through Dec. 15, 2031.
Moody's assigns 'P-1' to the A1 notes; 'Aaa' to the A2 through A4 notes; 'Aa1' to the class B notes; 'Aa3' to the class C notes and 'Baa2' to the class D notes. S&P says it will assign 'A-1+' 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.
