Subprime lending

New research from the New York Fed found that banks with more than $50 billion of assets originate more subprime car loans than small banks and credit unions do.

Chrysler vehicles dominate Santander's latest pool, reflecting increased originations that CEO Scott Powell believes will maintain the lender's captive-finance status.

Executives from Ally Financial and Santander Consumer USA gave rosy outlooks about 2019 consumer trends, while other banks that rely less heavily on car lending offered more cautious appraisals.

Both lenders are boosting originations to borrowers with near-prime loans, though the impact on the overall credit quality of the collateral for their deals is slight.

The collateral for the $550 million transaction is slightly weaker than that of its prior deal, but rating agencies expect cumulative net losses to be in the same range.

More than 45% of collateral for the $254.4 million CPSART 2019-A are either "preferred," "super alpha” or “alpha plus”; that's up from 42.4% of collateral for the prior deal.

The latest deal from the sponsor's DRIVE platform for deep subprime loans benefits from recent improvements in underwriting; both S&P and Moody's have lowered loss expectations.

It’s a trend that bears watching, particularly for holders of the riskiest securities issued in subprime auto securitizations, according to S&P Global Ratings.

The $175 million deal is backed by loans with an average balance of $2,365; fewer of them are "renewal loans" to existing borrowers who qualify to borrow more because of previous on-time payments.

The agency alleges the subprime auto lender violated consumer finance laws by misrepresenting the level of guaranteed insurance protection.