Issuing securities backed by revenues from payments on retail car loans and leases has been an annual ritual for Veros Auto Receivables Trust since 2020, usually between $200 million and $250 million.
The current transaction, series 2024-1, will issue $219 million notes through four tranches of class A, B, C and D notes, according to Kroll Bond Rating Agency. Veros Credit, the deal sponsor, is a privately-owned indirect auto lender that extends financing to subprime borrowers, with operations in 24 states. KBRA notes that Veros operates with four liquidity facilities from three financial institutions to fund new loan originations.
Yields on the notes are expected to range between 6.36% on the AA- and Aa2 notes--as rated by KBRA and Moody's Ratings, respectively–to 10.08% on the BB notes, as rated by KBRA, according to Asset Securitization Report's deal database. Capital One Securities and Deutsche Bank are on the deal as managers, according to the database.
The A, B, C and D notes have legal final maturities of Nov. 15, 2027, June 15, 2028, Dec. 15, 2028 and May 15, 2031, respectively.
In terms of the deal's underlying assets, the 14,277 contracts and obligors have a weighted average (WA) original term of 61 months, with 54 remaining. Also on a WA basis, the loans had a FICO score of 603. Also on a WA basis the loans have a loan-to-value ratio of 118%, and they had an APR of 22.75%.
Total initial hard credit enhancement, on the sequential repayment structure deal, ranged from 45.7% on the class A notes, to 14.60% on the D notes. Overcollateralization initially representing 13.10% of the pool is one form of credit enhancement, and as the pools amortize that will grow to a target of 20.15%. The transaction also benefits from a fully funded, non-declining reserve account representing 1.50% of the initial pool balance, and 11.20% in annualized excess spread, according to Moody' Ratings.
KBRA assigns AA-, A-, BBB and BB to the classes A, B, C and D, respectively. Moody's meanwhile, assigns Aa2, A1 and Baa2 to the A, B and C notes.
