CPS Secures $416.82 Million in Asset-Backed Securitization
CPS Secures $416.82 Million in Asset-Backed Securitization
Consumer Portfolio Services, Inc. (NASDAQ: CPSS), a leader in automotive financing, has successfully closed its fourth term securitization for the year. This significant transaction, which involves the issuance of $416.82 million in asset-backed notes, illustrates the company's strength in the financial market. Notably, it marks the 53rd senior subordinate securitization since 2011 and continues a commendable streak of 36 consecutive securitizations achieving a triple 'A' rating from at least two rating agencies for the senior class of notes.
Details of the Securitization
The securitization involved qualified institutional buyers purchasing asset-backed notes secured by $436.00 million in automobile receivables that were originated by CPS. These notes were issued through the CPS Auto Receivables Trust 2024-D and encompass five distinct classes of notes. The esteemed agencies, Standard & Poor’s and DBRS Morningstar, provided ratings based on a comprehensive review of the transaction structure and the historical performance of similar asset classes. This rigorous evaluation is a testament to CPS’s long-standing experience in serving as a reliable servicer in the market.
Structure of the Notes
The asset-backed notes consist of various classes with varying amounts and interest rates. Notably, the weighted average coupon on these notes is approximately 5.52%. Here’s a brief overview of the note classes:
Class A: $188.352 million at 4.91% interest rate with an average life of 0.71 years, rated AAA by both S&P and DBRS.
Class B: $56.240 million with a 4.65% interest rate and an average life of 1.75 years, rated AA.
Class C: $71.944 million at 4.76%, with an average life of 2.43 years, rated A.
Class D: $45.998 million at 5.14%, having an average life of 3.29 years, rated BBB.
Class E: $54.282 million at 7.13%, possessing an average life of 4.13 years, rated BB.
Enhancements & Funding Structure
The transaction features an initial credit enhancement that includes a cash deposit of 1.00% of the original receivable pool balance along with an overcollateralization of 4.40%. To maintain the quality and security of the notes, the agreements outline accelerated principal repayment plans to achieve overcollateralization of the lesser of 9.00% of the original receivable pool balance or 25.60% of the outstanding pool balance.
Additionally, a pre-funding structure was utilized; CPS sold approximately $298.42 million worth of receivables at the inception of the transaction and plans to sell around an additional $137.58 million in receivables in the upcoming month. This strategy is aimed at securing long-term financing for newly purchased receivables.
About Consumer Portfolio Services
Consumer Portfolio Services, Inc. specializes in providing indirect automobile financing, particularly to individuals with past credit challenges. This independent finance company purchases retail installment sales contracts primarily from franchised automobile dealerships, focusing on late model used vehicles and, to some extent, new cars. The company funds these acquisitions largely through securitization markets, ensuring that they can assist many consumers in achieving their automobile financing needs.
Investor Relations
For inquiries regarding investor relations, please connect with:
Danny Bharwani, Chief Financial Officer
949-753-6811
Frequently Asked Questions
What is the purpose of CPS's securitization?
The securitization allows CPS to raise capital backed by automobile receivables, thus enhancing its financing capabilities.
How often does CPS conduct securitizations?
CPS has completed 53 senior subordinate securitizations since 2011 and maintains a consistent rate of issuance.
What types of vehicles fund the contracts?
The contracts primarily involve late model used vehicles and some new vehicles.
What is the importance of the AAA rating?
A AAA rating signifies a low risk of default, enhancing the attractiveness of CPS's offerings to institutional investors.
Who can be contacted for more information on investor relations?
Danny Bharwani, Chief Financial Officer, is the key contact for any investor queries.
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