Auto ABS

Moody’s expects losses on Drive Auto Receivables Trust 2018-4 to reach 25% of the original balance over the life of the deal, down from 26% for its prior deal.

Investor appetite for deeply subordinated debt is increasing even as the industry starts to consolidate; problems at Honor Finance demonstrate the limits of relying on overcollateralization to offset losses.

About 8.5% of loans backing the $256.2 million transaction were reassigned from a 2015 deal; this boosted the weighted average seasoning to seven months from one month for ACA's prior deal.

S&P says extended term loans and "liberal" collection policies are pushing losses and amortization toward the tail end of some lenders' securitizations — making cross-comparing performance between lenders and an issuer's own outstanding vintage deals more difficult.

Westlake increased the size of all eight classes of notes by at least 37% as investor demand surges for subprime ABS paper

Westlake's $800 million offering features increased exposure to loans sourced through a relationship with Ally Bank; CAC's $398 million deal is notable for having less seasoned collateral.

Loans backing the $1.2 billion AmeriCredit Automobile Receivables Trust 2018-2 have the highest weighted average FICO score in the history of the platform.

The credit quality of the initial collateral pool is similar to that of United Auto Credit Corp.'s previous transaction, but the performance of the lender's managed portfolio of subprime loans is improving.

Kroll Bond Rating Agency says the riskiest notes issued in the 2016 transaction are at “substantial risk of loss,” following on the heels of a similar move by S&P last week. Kroll also put a more senior class of notes under review for a possible downgrade.

S&P has cut its credit ratings on a deep subprime loan securitization completed by Honor Finance in 2016, warning that the most subordinate tranche of notes issued in the deal is “at risk of not being repaid.”