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Subprime lender GLS ready to sell $666.5 million in auto ABS

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Global Lending Services is preparing to sponsor a $666.5 million sale of asset-backed bonds, under Rule 144a, to be repaid from a pool of auto leases extended to subprime borrowers.

The transaction, GLS Auto Receivables Issuer Trust, 2025-1 (GCAR 2025-1), will be the first term securitization this year under Global Lending Services' GCAR program. That platform has already supported 30 previous deals, since its launch in 2014, according to Kroll Bond Rating Agency.

GCR 2025-1 will issue notes through seven tranches of classes A, B, C, D and E notes, with maturities ranging from Feb. 17, 2026 on the notes rated K1+/R1 from KBRA and Morningstar | DBRS, respectively, to March 15, 2032 on the notes rates BB-/BB from KBRA and DBRS, respectively.

BMO Capital Markets is managing the deal, which should close on February 18, according to Asset Securitization Report's deal database.

KBRA notes that the A1 through A3 notes all benefit from an initial credit enhancement of 54.35%. Classes B, C, D and E have enhancement levels of 40.0%, 26.5%, 13.2% and 6.6%, respectively, according to DBRS.

Overcollateralization, subordination, a reserve account and excess spread give the transaction its credit enhancement, according to DBRS.

GLS originates the loans through its franchise operations and auto dealers, with auto dealers contributing 85.1% of the contracts to the pool.

Subprime borrowers make up the core of GLS's customer base. As of GCAR 2025-1's Dec. 31, 2024 cutoff date, the loans had a weighted average non-zero FICO score of 580, and borrowers had an average loan balance of $23,112, KBRA said. Also on a WA basis, the loans carried an interest rate of 20.8%, and the loans had an original term of 70 months, KBRA said.

KBRA finds that borrowers in GCAR 2025-1's underlying collateral pool have a slightly lower FICO score than the GCAR 2024-4 deal, and they bought more new cars with their borrowings.

DBRS places a cumulative net loss assumption of 18.9% on the notes, while KBRA expects the portfolio to see net losses of 15.4%.

KBRA assigns AAA to the A2 and A3 notes; and AA, A, BBB and BB- to classes B, C, D and E. DBRS ratings were similar, with AAA to the A1 and A3 notes; and AA, A, BBB and BB to classes B, C, D and E.

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