Santander Bank raises $1.2 billion for prime auto loans

Ron Antonelli/Bloomberg

Santander Bank, N.A. (SBNA) is sponsoring a second auto loan transaction under the SBAT program. A total of $1.239 billion notes are being issued by SBNA Auto Receivables Trust 2025-SF1 (SBAT 2025-SF1). The Class A notes, rated AAA by Moody's Ratings, represent 87.3% of the issue.

The securitization pool is made up of prime retail auto installment U.S. auto loan contracts originated by Santander Bank. SBNA is also the servicer and administrator for the transaction. The notes are backed by a pool of prime new and used automobile, light-truck and utility vehicle loans originated and acquired by SBNA.

The pool has a high concentration of 34.6% Tesla vehicles, although the Tesla portion has generally higher credit quality than the overall pool, according to Fitch Ratings.

Fitch's historical analysis shows that although performance has deteriorated for 2022 and 2023 auto loan originations, increases in delinquencies have not fully rolled into losses.

The notes have credit enhancement in the form of excess spread, cash reserve account, overcollateralization, and senior/subordinate structure, according to the Asset Securitization Report Deal Database. Fitch considers the credit enhancement to be adequate.

The prior SBAT 2024-A transaction was much more sub-prime than SBAT 2025-SF1, said Fitch. SBAT 2024-A had a weighted-average FICO score of 684 versus 762 for SBAT 2025-SF1.

According to Moody's, a credit strength is the fact that SBNA, the sponsor/servicer, is a wholly-owned subsidiary of Santander Holdings USA, Inc., which has 20 years of origination, servicing and securitization experience. The sponsor is rated A2 and has been originating auto loans since 2018. The senior management team also strengthens the sponsor's credentials, with many members having significant experience in auto financing at large auto lending companies.

The seller is Santander Bank, the managers are JP Morgan Securities, Inc. and Santander Investment Securities, Inc., and the trustee is Citibank, N.A.

The Class A notes (totaling $1.084 billion) are rated AAA by Moody's and not rated by Fitch. The Class B notes ($34.16 million) are rated AA1 by Moody's and AA by Fitch

The Class C notes ($38.51 million) are rated AA3 by Moody's and A by Fitch. The Class D notes ($44.73 million) are rated BAA2 by Moody's and BBB by Fitch.

Fitch rated the class E notes ($14.29 million) as BB and the Class F notes ($22.99 million) as B.