USAA Federal Savings Bank is returning to issue $1 billion in asset-backed securities collateralized by prime auto loan receivables in the USAA Auto Owner Trust 2023-A, with some significant changes to the collateral pool.
For example, the loans have an average original financed amount, $30,740, which is higher than the $22,107 average balance seen in the previous deal, the USAOT 2022-A, according to ratings analysts from S&P Global Ratings. The level of seasoning dropped to 18 months, from 21 months, while loans with remaining terms of 73-84 months increased to approximately 7.49%, up from 2.6%.
J.P. Morgan Securities is the manager on the deal, which is slated to close on September 15, according to Asset Securitization Report's deal database.
All of the notes—which are fixed rate—have legal final maturity dates that range from Sept. 16, 2024 through June 16, 2031. S&P expects to assign ratings of A-1+ to the A-1 notes; 'AAA' on notes A-2 through A-4; and 'AA' on the class B notes. Moody's Investors Service, meanwhile, expects to assign ratings of 'P-1' to the A-1 notes; 'Aaa' to notes A-2 through A-4 and 'Aa2' on the class B notes.
S&P notes that the collateral's FICO score increased to 742 from 739 on the USAOT 2022-A. One aspect of FICO scores remained the same from a year ago, however. Loans with FICO scores higher than 700 were 79% of the USAOT 2023-A pool.
The rating agency noted that delinquencies and losses are slightly higher compared with last year's portfolio. The normalization of delinquencies and losses since the COVID-19 pandemic—as well as recent economic headwinds such as inflationary pressures—accounts for this, the rating agency said.
The deal snapshot also indicates that the notes benefit from excess spread, a cash reserve account, overcollateralization and a senior-subordinate repayment priority.
Another potentially positive credit aspect of the collateral pool is its geographic diversity. Texas has the highest concentration of borrowers by billing address, with 14.07% of the pool. California, Florida, Virginia and Georgia follow with 8.34%, 7.56%, 6.59% and 5.93% of the pool, respectively.
