The Dallas-based lender, a unit of the global banking giant Banco Santander, was able to lower credit enhancement on the senior notes to 63.55% from 65.25% on the previous deal in February.
AmeriCredit returns to securitization for the first time since November with a $1.1 billion deal, while Flagship's $223 million deal, its second of 2018, takes a step back in collateral quality.
The senior tranche of Credit Acceptance Auto Loan Trust 2018-2 benefits from initial credit enhancement of 51.61%, up from 49.93% in a February deal; it comes from additional subordination.
RAC King (d/b/a American Car Center) has expanded rapidly since being acquired in a 2016 leveraged buyout; now it's bundling most of its portfolio into collateral for bonds.
The $185 million transaction features a higher exposure to borrowers entering bankruptcy than the sponsor's 2016 deal; it's also more seasoned, since it recycles 2014 collateral.
The sponsor is pooling what a majority of customers are buying these days, but future gas-price shocks could depressed used-vehicle prices on the lower MPG models.
The transaction is backed by 6,857 loans with a total balance of $835 million, or roughly 13% of the $6.4 billion of commercial vehicle and equipment loans in Mercedes-Benz Financial Services USA.
The performance of outstanding transactions issued via the Capital Auto Receivables Trust platform is weakening, so rating agencies are demanding additional investor protections.
Credit enhancement on the senior notes has risen to 36.25% from 28.7% to account for higher expected losses on the collateral; Kroll's base-case range is for 6.75% to 8.75% over the life of the deal.
