Santander Drive prepares to issue $1.7 billion in auto ABS

Santander Consumer USA is preparing to sponsor a $1.7 billion securitization of revenue from a pool of 70,785 non-prime quality retail installment loans that it has acquired.

The deal, Santander Drive Auto Receivables Trust, 2025-3, can be upsized to $2.1 billion. Aside from the difference in the issuance amounts, the capital structures are the same for both pool sizes, according to analysts at Moody's Ratings.

SDART, series 2025-3, will issue notes to investors through seven tranches of class A, B, C, D and E notes, according to Moody's. Fitch Ratings, which also rates the notes, finds that the class A, B and C notes have legal final maturity dates Aug. 17, 2026, Oct. 16, 2028 and Jan. 15, 2030, respectively. The subordinate classes B, C and D all have the same final maturity date, Sept. 15, 2031 and June 15, 2032 for the class E notes.

Santander U.S. Capital Markets is the lead underwriter on the deal, according to Moody's.

Hard credit enhancement levels on the notes have increased compared to what was seen on the series 2025-2, when credit enhancement hot a floor after declining steadily, according to Fitch.

Moody's says the notes benefit from initial over-collateralization representing 4.40% of the notes, which will build to 5.90% of the outstanding pool. There is also a non-declining reserve fund of 1.00% of the pool's initial balance, and 32.45% of subordinated notes for the pool.

All three of the class A notes benefit from the same 37.85% credit enhancement level, according to Fitch.

About 70% of the pool is composed of loans on used vehicles, according to Moody's. That could pose a credit risk to the notes, if prices on used cars fall, and expose the deal to lower recovery rates, Moody's said.

On a weighted average (WA) basis, borrowers have a FICO score of 602. The pool's loan-to-value ratio was 109%, and the loans had an original term of 72 months, according to Moody's.

Fitch assigned ratings of F1+, to the A1 notes and AAA to the A2 and A3 notes; AA to the class B notes; A to the class C notes; BBB to the class D notes and BB to the class E notes.

For its part, and regardless of the pool size, Moody's assigns ratings of P1 to the A1 notes; Aaa to the A2, A3 and class B notes; Aa3 to the class C notes and Baa3 to the class D notes.