United Auto Credit is sponsoring a $324 million securitization of revenue from subprime auto loans and will sell notes from the United Auto Credit Securitization Trust, 2025-1.
The deal will sell the notes through five classes of A, B, C, D and E notes, all of which are fixed rate, according to S&P Global Ratings, one of the companies rating the deal. The notes have legal final maturity dates ranging from June 10, 2027 on the class A notes through Oct. 10, 2-31 on the class E notes.
United Auto Credit, a Rule 144a transaction, is slated to close on March 31, according to S&P.
United Auto Credit's notes benefit from initial credit enhancement levels of 63.4%, 49.5%, 40.5%, 26.5% and 16.7% on the A, B, C, D and E tranches, respectively. Overall, total initial hard credit enhancement decreased on the deal from levels on the 2024-1, S&P said.
As far as subordination goes, the result was more mixed compared with the previous deal. In the 2025-1 series, subordination on the class A notes was 46.7%, an increase from the 46.44% seen on the 2024-1 series of notes. But it decreased on classes B, C and D, to 32.8%, 23.8% and 9.8%, from 34.5%, 24.8% and 10.4%, respectively.
The notes also enjoy enhancement from a reserve account representing 1.50% of the note balances, according to DBRS. S&P says the credit support levels provide at least 2.70x, 2.30x, 1.95x, 1.50x and 1.25x of its expected 23.50% expected cumulative net loss (ECNL) for classes A, B, C, D and E notes.
Wells Fargo is on the deal as the bank account provider S&P said. While United Auto Credit is also custodian and servicer, Computershare Trust is the deal's indenture trustee and backup servicer, S&P said.
The notes will repay investors through a senior-subordinate structure, the rating agencies said.
DBRS assigns AAA to the class A senior notes, which has the highest outstanding at $145. 5 million; AA, A, BBB and BB to the B, C, D and E notes. S&P assigns AAA to the class A notes, and AA, A, BBB and BB to the classes B, C, D and E notes, respectively.
