Westlake Financial Services issued its largest securitization to date, backed by $750 million in mostly nonprime auto loans, according to the company and the presale note from DBRS ratings.
Loans in the pool have an average size of $11,071, average terms of 48 months, and average Fico of 599, according to the presale, released March 16.
“With Westlake’s rapid growth, our credit performance continues to remain strong despite competitive and economic pressures,” said Paul Kerwin, Westlake’s chief financial officer, in a press release. “This combination is what attracts investors to our portfolio.”
The loans originated in the company’s securitization pools, are coming, increasingly, from franchise dealers rather than from independent dealers, which often results in higher loss rates, DBRS explains. However, the higher-risk independent originations still make up the bulk of the portfolio.
Specifically, independent and franchise dealers accounted for 62% and 38% of the pool, respectively, according to the presale note.
“Compared with loans in the franchise channel, loans from independent dealers tend to be shorter maturities, lower LTVs, against higher mileage vehicles, and result in higher loan losses,” the note reads.
While the pool is largely made up of subprime and nonprime used-vehicle loans, 42% of the pool is rated class A by DBRS.
Westlake initially offered $800 million before it was pared down to $750 million in its 2017-1 pool, making it the largest to date. The company’s final issuance of 2016 was previously its largest with an offer of $796 million, which was pared down to a pool size of $665 million, David Goff, assistant vice president of marketing, explained to Auto Finance News.
