A pool of subprime auto loan receivables will secure $1.6 billion asset-backed securities (ABS) from the Westlake Automobile Receivables Trust, 2022-3.
Westlake Services originated the underlying loans in the transaction, and acts as sponsor, servicer and custodian over the trust assets, according to S&P Global Ratings.
The trust will issue mostly fixed-rate notes to investors through a senior-subordinate structure with several key changes to the collateral from previous transactions. For one, according to S&P Global Ratings, the concentration of gold and platinum programs was 39.57% and 4.95%, respectively, which is an increase from 38.68% and 2.29%, respectively, from the Westlake 2022-2 collateral pool, according to S&P.
In another change, Westlake 2022-3 has a smaller percentage of auto loans with original terms of 61-72 months, 44.39%, compared with 56.06% in the previous deal. Seasoning is shorter on a weighted average (WA) basis, too, at 4.60 months, from 3.59 months.
Also on a WA basis, the collateral in Westlake 2022-3 has a payment-to-income was 14.04%, a decrease from 15.13%; a non-zero credit score of 613, an increase from 606; and an average loan-to-value ratio of 110.26%, compared with 112.54%.
The source of loans shifted from franchised dealers to independent ones, with franchised and independent dealers accounting for 34.41% and 65.59% of the pool, respectively. In the program's previous deal, franchise and independent leaders accounted for 40.82% and 59.18%, respectively.
About 106,545 receivables comprise the collateral pool, according to S&P, and they have an average principal balance of $15,054.
The pool has some significant concentration of assets, by geographic location. Similar to previous Westlake transactions, Texas, California and Florida together account for a plurality of assets in the pool. In Westlake 2022-3, Texas is the state with the largest concentration of loans in the pool, at 19.20%. Florida and California follow, with 16.28% and 12.72%, respectively, for a total concentration of 48.20%.
S&P expects to assign ratings of 'A-1+' on the class A-1 notes; 'AAA' on the classes A-2 and A-3 notes; 'AA' on the class B notes; 'A' on the class C notes; and 'BBB' and 'BB' on classes D and E notes, respectively.
