Exeter Finance Corp. is next to issue a securitization backed by subprime auto loans.  

The $500 million deal called Exeter Automobile Receivables Trust 2014-1 has been assigned preliminary ratings by Standard & Poor’s. The class A notes are rated ‘AA’, the class B notes are rated ‘A’, the class C notes are rated ‘BBB’ and the class D are rated ‘BB’.

Deutsche Bank is managing the deal. This is Exeter’s fifth subprime securitization.  According to the S&P presale report, the issuer  has experienced rapid growth. As of Dec. 31, 2013, the managed portfolio increased by 2.30x to $1.94 billion, compared with a year ago.

“While rapid growth is not unusual for relatively new subprime auto finance companies, we are concerned that the company's growth may have come at the expense of credit quality,” noted analysts.

Exeter has responded to concerns by tightening its underwriting standards, which include using nontraditional credit bureau data to identify borrowers at a greater risk of default and declining those borrowers. The weighted average FICO for its latest deal increased to 568 from 561 in the 2013-2 deal.

The portion of loans originated to obligors with FICOs greater than 600 also increased in the deal to 24.28% from 19.18%.

The company said it has also started to enforce down payment requirements and discontinued business with their weakest-performing dealers.

Exeter Finance Corp. is next to issue a securitization backed by subprime auto loans. The deal will offer investors

The $500 million deal called Exeter Automobile Receivables Trust 2014-1 has been assigned preliminary ratings by Standard & Poor’s. The class A notes are rated ‘AA’, the class B notes are rated ‘A’, the class C notes are rated ‘BBB’ and the class D are rated ‘BB’.

Deutsche Bank is managing the deal. This is Exeter’s fifth subprime securitization.  According to the S&P presale report, the issuer  has experienced rapid growth. As of Dec. 31, 2013, the managed portfolio increased by 2.30x to $1.94 billion, compared with a year ago.

“While rapid growth is not unusual for relatively new subprime auto finance companies, we are concerned that the company's growth may have come at the expense of credit quality,” noted analysts.

Exeter has responded to concerns by tightening its underwriting standards, which include using nontraditional credit bureau data to identify borrowers at a greater risk of default and declining those borrowers. The weighted average FICO for its latest deal increased to 568 from 561 in the 2013-2 deal.

The portion of loans originated to obligors with FICOs greater than 600 also increased in the deal to 24.28% from 19.18%.

The company said it has also started to enforce down payment requirements and discontinued business with their weakest-performing dealers.

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