Santander Consumer is marketing a fourth offering of bonds backed by subprime auto loans from its Santander Drive Auto Receivables Trust.
The $1.05 billion Series 2015-4 notes are backed by a pool of new and used automobile, light truck and utility vehicle loans. According to Fitch Ratings, the collateral backing 2015-4 is consistent with that of the pervious deal, Series 2015-3 completed in June, with a weighted average (WA) FICO score of 600 and an internal WA loss forecast score of 555.
The WA seasoning is approximately 1.5 months, new vehicles total 38.5% and the pool is geographically diverse.
Loans with terms of 60+ months total 91.4%, with 73-75 month term loans totaling 16% in 2015-4. The performance history of these longer term loans is limited, and Fitch expects that they will perform worse than shorter-term loans. Longer term loans amortize more slowly, increasing the risk that a vehicle may not be worth enough to pay off a loan should the borrower default.
The trust will issue $170.50 million of money market notes and three tranches of securities with preliminary AAA’ ratings from Fitch: two totaling $315.55 million with a final maturity of December 2018, and a $128.00 million tranche maturing in September 2019. All benefit from credit enhancement of 49.85%.
Wells Fargo Securities is the lead underwriter.
Since the Series 2015-1 was completed, Santander has disclosed that the Consumer Finance Protection Bureau has asked federal prosecutors to investigate it for alleged bias toward minority borrowers. In its presale report, Fitch said it does not believe that these issues will have a material impact on the performance of 2015-4 or Santander’s ability to adequately service the transaction.