Big Wheels: USAA issues first auto ABS deal since 2022

USAA came to market this month with its first auto asset-backed securities transaction since 2022 and Volkswagen AG issued its first lease ABS deal of the year. USAA’s $789.5 million deal, issued on Sept. 7, is backed by prime auto loans, according to Finsight , which monitors securities. The lender last came to market on Oct. 4, 2022, with a $500 million deal that was also backed by prime auto loans. USAA’s latest deal has an overcollaterization of 0.75% and a reserve of 0.25%, in line with the target rates and the same as the prior deal, according to an S&P Global presale report. The weighted average FICO score across loans collateralized in the new deal inched up to 742, compared with 739 in the 2022 transaction, while the average amount financed climbed to $30,740 compared with $22,107 in the prior deal. Longer-term loans were more prevalent in the lender’s latest deal, with terms of 73 to 84 months in the pool increased to 7.49%, up from 2.6% in the 2022 deal, according to S&P. The pool includes 51.4% new-vehicle loans and 48.6% used-vehicle loans. USAA had $18.9 billion in outstanding auto loans as of June 30, an increase of 18.1% year over year, according to S&P. Volkswagen issues $1.5B lease deal Volkswagen issued a $1.5 billion auto ABS deal backed by lease receivables on Sept. 12, according to Finsight. The lender previously issued a $1.5 billion deal backed by prime auto loans on June 6, bringing the year-to-date securitized volume to $3 billion. The last time Volkswagen came to market with a lease auto ABS transaction was a $1 billion deal in June 2022. VW Credit ’s outstandings stood at $12.6 billion as of March 31, according to a filing with the Securities and Exchange Commission . Carvana’s newest prime deal Carvana issued a $243.5 million deal backed by prime auto loans Tuesday, marking the second time the lender has come to market this month, according to Finsight. Carvana previously issued a $282.6 million nonprime auto ABS deal on Sept. 12, which followed a $317.3 million transaction backed by prime auto loans on Aug. 7. In total, Carvana has securitized $2.3 billion in auto ABS deals this year. Carvana has originated $2.9 billion in auto loans through the second quarter, down 26.4% YoY, according to the company’s Q2 letter to shareholders. Carvana has picked up its capital markets activity as investor sentiment improves, Chief Executive Ernie Garcia said on Sept. 13 during Morgan Stanley 's Laguna Conference . Carvana finalized its debt swap restructuring with creditors in July, giving the company additional capital runway to tighten operations. “One of the tough parts of going through a period like the last 18 months is our capital markets brand got beat up pretty good,” Garcia said. “Our cost of capital in the ABS market was significantly worsened. … That was another thing hurting [gross profit per unit]. “As things have gotten better deal over deal in the last six months, we've been tightening that down,” he added. “Relative to other issuers that issue similar [securities], we're in a good spot. We just priced a deal ... where we ratcheted down relative to competitors again. The ABS market is solid today.” Shares of Carvana [NYSE: CVNA] were trading at $42.90 at market close today, down 1.85% since market open. Carvana has a market capitalization of $8.13 billion. Additional ABS deals Citizens Financial securitized $1.5 billion in prime auto loans on Sept. 6, according to Finsight. The bank’s auto book continues to run off following the financier’s exit from indirect auto lending in August. Citizens has securitized $3 billion in prime auto loans across two deals this year. Other auto ABS issuers this month include Ford Credit , GM Financial , Hyundai Capital America , Tesla , Toyota Financial Services and Pagaya Technologies , according to Finsight. Auto Finance Summit, the premier industry event for auto lending and leasing, returns October 29-31 at the Bellagio Las Vegas and features a fireside chat with F ord Credit. To learn more about the 2023 event and register, visit autofinance.live/afs/ .

Big Wheels: USAA issues first auto ABS deal since 2022

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