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SDART 2023-2 will build overcollateralization (OC) as it amortizes, initially 23.75%, which is expected to build to a target OC level of 32.50%.

The transaction benefits from several forms of credit enhancement, including overcollateralization, excess spread and Vervent acting as backup servicer.

A vast majority of the collateral, a combined 82.73%, have terms of between 49-60 months (58.46%) and 61-72 months (24.27%), while a slight majority of the pool (51.66%) have no credit scores.

Losses are increasing in both the managed portfolio and the securitization, the deal, known as EART 2023-2, has a number of forms of credit enhancements built into the structure.

Monthly payment rates in the pool reached record highs over the last couple of years, reaching 71.5% at the end of Q1 2023, one of several credit positives to the deal.

The results offered investors some relief after a tumultuous 2022 for Carvana, which has struggled as rebounding auto production and rising interest rates have weighed on the market for used vehicles.

GMALT 2023-2 offers note holders several advantages from a credit perspective, according to Fitch, including strong residual value realizations on the cars being financed.

Underlying loans fell into higher credit tiers this time around, a result of ongoing tightening in the sponsor company's origination strategies.

The deal has a higher percentage of open bankruptcy assets, and the level of called collateral is 10.6%, which should actually slip to 8.0% of the final pool.

While spreads are widening in many cases across asset classes and credit bands, guidance is around 235 basis points over the I-Curve on the 'AAA' notes, a little tighter than 250 bps over the benchmark on the FHF 2022-2 deal.