Auto ABS

DriveTime is making less-risky loans under a $750 million contract purchase agreement with Ally Financial; it appears that the sponsor is also funding some of this lending through its own securitization platform.

Auto loan securitization has been in overdrive this year, even if the global tussle over import tariffs is injecting a note of caution.

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.”

OneMain can add qualifying loans to the pool of collateral for the first two years of the transaction; by comparison, its two prior deals featured one-year revolving periods.

The Dallas-based lender's third foray into the deep subprime ABS market in 2018 arrives as recent Santander DRIVE securitizations are performing well with recently lowered loss expectations from S&P Global Ratings.

Loans originally securitized in three 2013 transactions account for some 11.4% of the initial collateral for the $230 million CPS Auto Receivables Trust 2018-C, according to S&P Global Ratings.

Bavarian Sky UK 2 plc is as yet unsized; the collateral will initially consist of 70% new and 30% used primarily BWM and MINI vehicles, 56% of which use diesel fuel, according to Moody's Investors Service.

The rental car giant is issuing approximately $213 million each of notes maturing in July 2021 and July 2023 from its revolving master trust, Hertz Vehicle Financing II LP, according to rating agency presale reports.

In Santander Consumer USA's third subprime shelf offering of 2018, new cars represent 55.8% of the collateral. In previous deals dating to 2013 new-car concentrations did not exceed 40.9%.

Global Lending Services returns to double-A status in its new $299.4M transaction, while American Credit Acceptance issued another AAA-rated deal with a substantial prefunding account feature.

The subprime lender could lose a big partner now that Fiat Chrysler has officially announced it will form its own auto finance unit, and the two are negotiating an end to their 6-year-old relationship.