Carvana is bringing $337.3 million in asset-backed securities to market in a deal that’s expected to close June 27, according to a presale report by Moody’s Investors Service issued this week.
Carvana’s second deal of the year props up its ABS volume to $676.1 million just three months after the online used-vehicle retailer completed its inaugural securitization. Mostly subprime retail auto loans back Carvana’s latest transaction, and the pool consist of 18,787 auto loan contracts originated by Carvana and serviced by Bridgecrest Credit, a subsidiary of DriveTime Automotive Group.
Compared with Carvana’s March securitization, the new deal shows a Fico score increase to 636, one point higher than the previous transaction. The weighted loan-to-value ratio decreased to 96% compared with 99%. Meanwhile, the weighted average APR increased “slightly” to 13.84% compared with 13.47% during the last deal, Moody’s notes.
Average loan term of 70 months remains similar to the last transaction, and Texas, Georgia, and Florida still hold as the top three states for geographic distribution.
As for Carvana’s managed portfolio’s net losses, the portfolio’s 30-plus-day delinquencies as a percentage of the month-end receivables balance as of March 31 were 4.7%, up from 3.8% during the same time last year. Net losses as a percent of average principal outstanding remained flat at 0.7%.
Moody’s credit loss expectation is 11% because the loan contracts backing the transaction skew toward subprime borrowers, the presale report notes. However, Moody’s highlighted the strength of Bridgecrest Credit to help mitigate potential losses.
“Bridgecrest Credit has more than 20 years of experience servicing nonprime auto loans and has a servicing portfolio of approximately $7 billion,” Moody’s notes. “It handles roughly $400 million payment collections each year.”
