LAS VEGAS -

Consumer Portfolio Services finalized the closing of its first term securitization in 2016 this week.  The transaction is CPS’ 19th senior subordinate securitization since the beginning of 2011 and the second consecutive securitization to receive a triple A rating on the senior class of notes from two rating agencies. 

In the transaction, officials from the subprime auto finance company highlighted qualified institutional buyers purchased $329,460,000 of asset-backed notes secured by $340 million in automobile receivables purchased by CPS.  The sold notes, issued by CPS Auto Receivables Trust 2016-A, consist of five classes. 

Ratings of the notes were provided by Standard & Poor’s and DBRS and were based on the structure of the transaction, the historical performance of similar receivables and CPS’ experience as a servicer. 

The company retained the most subordinated notes, Class F, in the principal amount of $10,540,000.

Note Class Amount Interest Rate Average Life Price S&P Rating DBRS Rating
 A  $177.65 million  2.25%  .89 years   99.99619%  AAA  AAA
 B  $42.50 million  3.34%  2.21 years  99.98194%  AA  AA
 C  $51.85 million  3.80%  2.86 years  99.97672%  A-  A
 D  $36.55 million  5.00%  3.59 years  99.97570%  BBB  BBB (low)
 E  $20.91 million  7.65%  4.04 years  99.97014%  BB-  BB (low)
 F  $10.54 million  7.65%  4.05 years  Retained  B  B (low)

Officials pointed out the weighted average yield on the notes, including the retained notes, is approximately 4.34 percent.

CPS indicated the 2016-A transaction has initial credit enhancement consisting of a cash deposit equal to 1.00 percent of the original receivable pool balance.  The final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of 4.00 percent of the then-outstanding receivable pool balance.

The company mentioned the transaction utilizes a pre-funding structure, in which CPS sold approximately $255.9 million of receivables this week and plans to sell approximately $84.1 million of additional receivables during February.

“This further sale is intended to provide CPS with long-term financing for receivables purchased primarily in the month of January,” officials said.

“The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law,” they continued. “All of such securities having been sold, this announcement of their sale appears as a matter of record only.”