Seven months after its debut 144a securitization of revenue from prime quality motor vehicle loans and retail installment loan contracts on new and used motor vehicles, Space Coast Credit Union (SCCU) is following up with a $489.9 million deal.
The A1 notes have a legal final maturity date of July 15, 2025; the A2 notes mature on Dec. 15, 2027; and the A3 notes mature on June 15, 2029. The bulk of the notes, classes A4 through C, mature at various points in 2030; and the class D notes mature on July 15, 2032, according to Moody's.
Most of the notes, classes A1 through A4, have a total initial hard credit enhancement of 9.19%, Moody's said. Classes B, C and D have initial credit enhancement levels of 6.09%, 2.50% and 125%, according to the capital structure details. A reserve fund, which equals 0.25% of the pool balance, is among the different levels of credit enhancement. That credit boost includes overcollateralization, subordination and excess spread.
On a cumulative basis, Moody's has a net loss expectation of 1.75%, and the loss at a AAA stress level is 9.50%.
Auto loans indirectly originated through dealer channels back the collateral pool, which has a credit score of 761 on a weighted average (WA) basis. The trust will repay principal to noteholders sequentially, and enhancement will build as the pool amortizes.
Yet there are some credit challenges, Moody's said. For one, SCCU is the servicer on the transaction, but since this is only its second deal, its performance history is limited. Also, a slight majority of the pool balance, 56.5%, has an original term of 73 to 84 months, compared with 49.4% on the SCCU 2023-1 pool, the rating agency said.
Also, all the obligors are based in Florida, which exposes the transaction to any performance issues stemming from regional economic stress.
Moody's assigns P1 to the A1 notes; Aaa to the A2 through A4 notes; Aa1 to the class B notes; A2 to the class C notes an Baa3 to the class D notes.
