On
line used-car retailer Carvana priced its inaugural asset-backed securitization on March 27, 2019.
“The transaction was squarely in line with our expectations for an inaugural deal, yielding strong proceeds and leaving a clear path toward achieving our long-term goals,” Chief Executive Ernie Garcia said in a press release.
The $338.8 million securitization consists of notes backed by fixed-rate installment loans originated through Carvana’s direct lending platform to borrowers with an average credit score of 635, a Kroll Bond Rating Agency presale report said.
The typical loan in the securitization has a $17,998 principal balance and a 13.47% interest rate. Yields on the transaction’s seven tranches — which reflect the perceived riskiness and liquidity of the underlying loans — ranged from 2.71% for the highest-rated pool to 5.71% for the lowest-rated, according to IFR Markets.
The securitization includes a 2% “cleanup call” provision, which allows the issuer to redeem the notes early and repay all outstanding balances. More established securitizers like GM Financial or Santander Consumer USA typically have cleanup-call options in the 10% range. The transaction was slated to close March 28, 2019.
