Westlake Automobile Receivables Trust is preparing to issue about $1 billion in auto asset-backed securities, raising the funds off of a pool of loans that are of a slightly better credit quality than its most recent deal.
Westlake Services is sponsoring the transaction, known as WART 2023-1, and it is slated to close on January 20. As of November 30, the receivables in the pool had a weighted average (WA) credit score of 623, an increase from 605 in the Westlake 2022-2, a deal that came out in June 2022, according to a pre-sale report from Morningstar | DBRS.
Westlake secures financing for used vehicles that have high mileage, typically. The company makes loans through its independent and franchise dealers, which account for 60% and 40% of the pool, respectively, according to DBRS.
The deal will issue notes through eight classes, and generally follow a senior-subordinate structure. Subordination at a level of 30.3% initially; a reserve account at a non-declining level of 1%; 9% overcollateralization and subordination provide credit enhancement to the class A notes, initially, the rating agency said. Otherwise, excess spread will provide credit support throughout the structure, in addition to declining levels of subordination, overcollateralization and the reserve account, according to DBRS.
JPMorgan is the lead underwriter on the deal.
DBRS expects to assign ratings of R-1 to the A-1 notes; 'AAA' to the A-2-A through A-3 notes; 'AA' and 'A' to the classes B and C notes; and 'BBB' and 'BB' to the classes D and E notes, the rating agency said.
