Subprime lending

CarMax, BMW, Santander and Credit Acceptance Corp. all launched deals Thursday; they add to the $35 billion in prime auto, $12.31 billion in prime lease, and $19.4 billion in subprime auto loan ABS so far this year.

The proportion of collateral that will be acquired after the CPS Auto Receivables Trust 2017-D closes is 33.3%, or $66 million, from the 29.7% level from the sponsor's prior deal in July.

Investor demand for mortgage bonds is strong; the only limiting factors are consumer awareness of the product and loan officers' willingness to offer them.

The $426.2 million COLT 2017-2 is backed entirely by loans originated by Caliber, an affiliate of private equity firm Lone Star Funds. There are no loans originated by Sterling Bank & Trust, which accounted for 22% of the collateral for the prior deal.

The credit quality of the collateral is lower, by several metrics, than that of Exeter's prior deal; however, S&P Global expects cumulative net losses to be in the same range, from 20.1%-21.1%.

Powell downplayed fears about subprime auto lending, saying he aims to improve Santander Consumer's compliance culture, beef up customer services and expand its relationship with Chrysler Capital.

Scott Powell will lead the auto lender while continuing to serve as CEO of Santander Holdings, the U.S. division of the Spanish banking giant Banco Santander.

More than 20% of the pool is comprised of well-seasoned subprime auto loans previously securitized in American Credit Acceptance's asset-backed deals in 2012-2014.

Auto, personal and credit card originations have fallen as delinquencies have risen, but researchers called the slowdown a temporary rebalancing by lenders.

Both lenders are on their third auto-loan securitization of the year, with little variance from previous credit enhancement or expected loss levels.

Lower average FICOs and fewer loans to higher-qualified buyers are among the reasons DBRS has assigned a higher loss level to Westlake's latest transaction.

Loans with terms between 73 months and 75 months comprise 15.6% of the collateral for DRIVE Auto Receivables Trust 2017-2, up from 0.5% in 2017-1; yet Moody's Investors Service is holding its loss expectations stable.

The credit characteristics of the collateral are broadly similar to the sponsor's inaugural deal, completed in February, but the capital structure has been tweaked.

The collateral pool has a slightly higher percentage of new vehicles (24.53%) than the sponsor’s previous deal, and a shorter remaining weighted average term (62 months).

The senior notes benefit from initial credit enhancement of 29.5%, nearly three percentage points higher than the same tranche of the sponsor's previous transaction.

Angel Oak was able to secure triple-A credit ratings for its next offering of nonprime residential mortgage bonds, despite offering considerably less credit enhancement.

The marketplace lender had to offer higher investor protections on a consumer loan securitization than rival Upstart, but it also achieved a lower funding cost

The lender increased credit enhancement for the subordinate tranches of Springleaf Funding Trust 2017-A to offset lower FICOs and larger balances.

As of late Thursday, there were two bond offerings backed by prime auto loans (Ford, Honda), three backed by subprime auto loans (Santander, GLS, UACC) and two backed by dealer inventory financing (Ally, Navistar).

Two more subprime auto lenders, Westlake Financial Services and Flagship Credit Acceptance, are making their first trips of the year to the securitization market.