The Oregon Community Credit Union is preparing to sponsor a securitization that will sell $307.3 million in notes through the OCCU Auto Receivables Trust, series 2026-1.
The transaction will sell notes through seven tranches of class A, B, C and D notes. The senior tranches, A1, A2, A3 and A4, all benefit from the same initial credit enhancement level of 17.75%, according to Kroll Bond Rating Agency. have legal final maturity dates of July 15, 2027, Sept. 17, 2029, July 15, 2031 and March 15, 2032, according to Kroll Bond Rating Agency.
Credit enhancement levels on the OCCU 2026-1 dropped from the previous deal across all asset classes, KBRA said. On the previous deal, the class A notes had credit enhancement levels of 23.00%. Classes B, C, and D had credit enhancement levels of 17.35%, 12.15% and 7.05%, respectively.
Notes will be repaid sequentially, according to KBRA, beginning with the A1 notes receiving principal payments before all the subordinate notes, until the class D notes are paid off, according to the rating agency.
While the sequential repayment order confers subordination to the notes, the deal structure also includes overcollateralization, a cash reserve account and excess spread. The overcollateralization has a target of 5.85%, according to KBRA.
A cash reserve account is in place, funded to about 0.50% of the pool balance as of the cutoff date, according to the rating agency. The notes also benefit from excess spread representing 1.13% of the note balance.
Used vehicles collateralize 53.01% of the underlying loans, according to KBRA. On average, loans in OCCU 2026-1 have a balance of $34,185, with an annual percentage rate (APR) of 7.54%. Leverage is significant, with a loan-to-value ratio of 98.30%, KBRA said. Loans have an original term of 80 months, the rating agency said.
Geographically, the pool is concentrated, with 89.3% of the loans made to borrowers in Oregon (45.16%) Washington (32.67%) and California (11.63%), according to KBRA.
KBRA assigns K1+ to the A1 notes; AAA on the A2 through A4 notes; and AA-, A- and BBB to classes B, C and D notes.
