Strike Acceptance, a Laguna Hills, Calif.-based company, is readying the sale of $107.9 million in asset-backed bonds supported by loans on autos and powersport vehicles extended to subprime borrowers.
Strike Acceptance Auto Funding Trust, series 2025-1, will sell notes through three tranches of A, B and C notes, according to analysts at Morningstar | DBRS, which also notes that the deal is structured as a public securitization, under Rule 144A.
The rating agency assigns A, BBB and BB to the notes, respectively, according to the DBRS pre-sale report. Initially, the notes benefit from hard credit enhancement representing 32.6%, 24.0% and 12.5%, respectively.
STRIKE 2025-1 also benefits from initial overcollateralization representing 11.5% of the pool, with a target level of 17.4%. A reserve account representing 1.00% of the pool balance also adds credit enhancement to the pool.
Strike Acceptance provides the financing indirectly through more than 1,100 independent and franchised dealers nationwide. Almost all the 7,044 contracts in the 2025-1's collateral pool finance used vehicles, and the customers borrowing those funds have little to no credit history. Their non-zero credit bureau scores, in fact, is 563, the rating agency said.
The contracts finance light-duty trucks, minivans and sport-utility vehicles, the rating agency said, with a weighted average (WA) remaining term of about 54 months. Also on a WA basis, the assets have a loan-to-value ratio of 116.8%. Borrowers are also highly concentrated in five states namely California, Florida, Texas, North Carolina and Arizona, which account for 35.2%, 31.6%, 7.3%, 6.3% and 5.6%, respectively.
