Space Coast Credit Union's third securitization deal will raise $507.62 million in asset-backed securities (ABS) from a pool of prime motor vehicle loans and retail installment sale contracts.
Contracts financing new and used vehicles and originated through car dealers will primarily makeup the loans in the pool, according to Moody's Ratings. The deal faces a few upfront credit challenges, including the fact that the collateral's credit quality has weakened, along with the Space Coast managed portfolio.
The transaction also faces potential credit risks from the risk of declining used car prices and tariff policies that could negatively impact consumer health.
SCCU Auto Receivables Trust, 2025-1, will issue notes through six tranches of class A, B, C and D notes. All the class A notes benefit from the same level of total initial hard credit enhancement, 9.70%, according to Moody's. Classes B, C and D benefit from credit enhancement that equals 6.70%, 3.50% and 1.75% of the note balance, the rating agency said.
The deal's credit enhancement is made up of a reserve fund representing 0.25% of the pool balance, target overcollateralization of 3.85%, subordination and excess spread, Moody's said.
Moody's notes that 13,560 contracts make up the collateral pool, and they represent borrowers that have a weighted average (WA) credit score of 760. Also, the pool has a WA loan-to-value ratio of 110%, and a WA annual percentage rate (APR) of 7.40%.
Moody's assigns ratings of P1 to the A1 notes; Aaa to the A2 through A4 notes; Aa1 to the class B notes; and A2 to the class C notes.
