LAS VEGAS and SOUTHFIELD, Mich. -

With S&P Global Ratings and Fitch Ratings keeping close watch of how the auto ABS market is behaving, two finance companies that have conducted several rounds of securitizations — Consumer Portfolio Services and Credit Acceptance — recently added more offerings.

At CPS, the company recently announced the closing of its fourth term securitization in the year.  The transaction is CPS' 22nd senior subordinate securitization since the beginning of 2011 and the fifth consecutive securitization to receive a triple-A rating on the senior class of notes from two rating agencies.

In the transaction, qualified institutional buyers purchased $206.3 million of asset-backed notes secured by $210.0 million in automobile receivables purchased by CPS. The sold notes, issued by CPS Auto Receivables Trust 2016-D, 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.

CPS Auto Receivables Trust 2016-D
Note Class Amount Interest Rate Average Life Price S&P Rating DBRS Rating
 A  $100.17 million  1.50%  .89 years  99.99188%  AAA  AAA
 B  $28.88 million  2.11%  2.17 years  99.97964%  AA  AA (high)
 C  $32.66 million   2.90%  2.86 years  99.97993%  A  A
 D  $24.57 million  4.53%  3.62 years  99.98362%  BBB  BBB (low)
 E  $20.06 million  6.86%  4.14 years  99.98198%  BB-  BB (low)

The weighted average coupon on the notes is approximately 3.62 percent.

CPS indicated the 2016-D transaction has initial credit enhancement consisting of a cash deposit equal to 1.00 percent of the original receivable pool balance and over-collateralization of 2.00 percent. The company added the final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of 5.50 percent of the then-outstanding receivable pool balance.

Officials went on to mention the transaction utilizes a pre-funding structure, in which CPS sold approximately $140.1 million of receivables in this deal and plans to sell approximately $69.9 million of additional receivables during November.

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

Meanwhile over at Credit Acceptance, the company announced the completion of a $350.0 million asset-backed non-recourse secured financing. Pursuant to this transaction, the company explained that it contributed contracts having a net book value of approximately $437.8 million to a wholly-owned special purpose entity which will transfer the loans to a trust.

There are three classes of notes.

Credit Acceptance Financing
Note Class Amount Average Life  Price Interest Rate
 A  $227,500,000  2.48 years  99.98486%  2.15%
 B  $67,900,000  3.15 years  99.98839%  2.94%
 C  $54,600,000   3.44 years  99.98137%  3.60%

 Credit Acceptance explained the financing will:

• Have an expected annualized cost of approximately 2.9% including the initial purchaser's fees and other costs;

• Revolve for 24 months after which it will amortize based upon the cash flows on the contributed loans; and

• Be used by us to repay outstanding indebtedness.

The company added that it will receive 6.0 percent of the cash flows related to the underlying consumer loans to cover servicing expenses. The remaining 94.0 percent, less amounts due to dealers for payments of dealer holdback, will be used to pay principal and interest on the notes as well as the ongoing costs of the financing.

“The financing is structured so as not to affect our contractual relationships with our dealers and to preserve the dealers' rights to future payments of dealer holdback,” Credit Acceptance officials said.