GCAR ABS subprime auto loan

A pool of subprime auto loans on new and used vehicles will guarantee $ 559.9 million in asset-backed securities, the sixteenth securitization of Global Lending Services since their market launch in 2014.

Global Lending Services grants loans through franchised and independent car dealerships, and CLS 2021-2 pool loans have a weighted average FICO score of 570, an average current balance of $ 18,688, and an average interest rate. weighted 18.38%, according to Kroll Bond Rating Agency.

The agreement, GCAR 2021-2, has a number of positive features from a credit perspective. The underwriting and risk management process is highly automated, technology-driven and multi-step. Every loan application decision is made this way.

GLS has been profitable since 2017 and reported positive annual net profit of $ 28.5 million as of March 31, 2021. At that time, the company also had total assets of approximately $ 3.1 billion and total equity. of $ 240.9 million.

KBRA found other positive points about the deal, mostly related to structure. Tickets are reimbursed according to a sequential structure. The principal of the Category A Notes will be refunded in full prior to the commencement of payment on the Category B Notes, followed by any Subordinate Notes which will be refunded through the Category E.

The initial overcollateralisation is 3.10% of the cutoff pool balance and will increase to a target overcollateralisation equal to the sum equal to 12.1% of the current pool balance, plus 1.5% of the cutoff pool balance . The transaction also benefits from subordination, a cash reserve account and excess spread.

The agreement also has an initial credit enhancement of 52.8%, the second highest level of initial credit enhancement on CGCAR transactions since 2017. Only the agreement immediately preceding GCAR 2021-2, GCAR 2021- 1, had a higher initial credit enhancement of 54.2 percent.

Geographic diversification is another advantage, as Texas accounts for 12.8% of the guarantee pool, followed by California (7.7%) and Florida. These three states represent the highest concentrations of states.

KBRA also noted that Wells Fargo is acting as a backup agent.

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