Auto ABS

As interest rates rise and delinquencies among borrowers with poor credit scores soar, investors are increasingly scrutinizing the riskiest slices of asset-backed securities sold by some subprime auto lenders. That's forced certain issuers to postpone deals or sweeten terms.

Regardless of HAROT 2023-4's issuance amount, which could reach $1.8 billion, all of the notes have total initial hard credit enhancement levels of 2.75%, and a reserve fund of 0.25%.

ACAR 2023-4 pool has a weighted average (WA), non-zero FICO score of 551, noticeably higher than the 535 FICO score of 2023-2.

S&P sets out to rate $83.85 million in several subordinate notes, all of which are secured by auto loans, and which are expected to mature in January 2034.

DriveTime is a longtime issuer, but Bridgecrest Lending Auto Securitization is the first securitization of the sponsor's assets that Bridgecrest Acceptance services.

The transaction could be upsized to $1.25 billion, from $1 billion, but the 4.00% overcollateralization level is expected to remain constant through the life of the deal.

Vervent is on the deal as the backup servicer and Deutsche Bank National Trust as custodian, to help offset any risks stemming from First Help Financial's shortcomings as servicer.

Enhancement includes initial over-collateralization of 19.15% of the pool balance, which is expected to build to 27.50% of the outstanding pool balance, plus 2.00% of the initial pool balance.

The notes benefit from several credit boosters. At closing credit enhancement to the class A notes will be 21.70% of the initial pool balance, plus the pre-funding amount, and could build to 24.30% or greater.

At some point the company hopes to become a full-credit spectrum lender, so funding the Select Program is another step toward that, according to ratings analysts.