Prime quality retail installment auto loans extended to United Services Automobile Association (USAA) members will back $1.1 billion in asset-backed securities (ABS) coming to market through the USAA Auto Owner Trust 2025-A.
USAOT 2025-A will sell the fixed-rate notes through five tranches of class A and the subordinate B notes, according to analysts at Moody's Ratings and S&P Global Ratings.
J.P. Morgan Securities heads up the underwriters on the deal, which includes Citigroup Global Markets, SMBC Nikko Securities America and TD Securities, Moody's said.
The notes have legal final maturity dates ranging from Oct. 15, 2026 on the A1 notes to Feb. 15, 2033 on the class B notes, the rating agency said. Moody's set its cumulative net loss (CNL) expectation for the collateral pool is 0.60%, with a loss at the AAA stress level of 3.00%.
The nature of USAA, as an insurance and banking services company for military personnel, veterans and their family members, is a credit strength, according to Moody's.
"USAA FSB is an experienced servicer, having serviced securitizations since 1993," Moody's analysts wrote.
The membership also knows its customers thoroughly, because of its wallet share of borrowers' business.
"USAA members frequently utilize many different services offered under the USAA umbrella and often use these products indefinitely," Moody's analysts say.
S&P, in turn, says its estimated cumulative net loss (ECNL) of USAOT 2025-A's notes is 0.75%, slightly lower than the 0.80% for series 2024-A. The class A notes benefit from 5.00% in total credit support, while the class B notes benefit from 3.46%, the rating agencies said.
Credit challenges persist, however, including a high proportion of longer-term loans. On a weighted average (WA) basis, the 54,167 auto loans have an original term of 66 months, with a remaining term of 47 months, Moody's said. Also, the pool has a FICO score of 750 and an annual percentage rate of 6.16%.
New vehicles account for a slight majority of the pool, 52%, Moody' said.
Moody's assigns P1 to the A1 notes; Aaa to the A2 through A4 notes; and Aa3 to the class B notes; while S&P assigns A1+ to the A1 notes; AAA to the A2 through A4 notes; and AA- to the class B notes.
