Chrysler Capital is the latest auto finance company to join the ABS pipeline in 2015, with a $732.05 million ABS issuance, according to a presale report from Standard and Poor’s.
The Chrysler Capital Auto Receivables Trust 2015-A’s (CCART 2015-A), backed by “retail installment sales contracts for new and used automobiles and light-duty trucks,” according to the report, shows that the percentage of loans with terms of 73 to 75 months has increased slightly to 20.1%, up from 19.9% in the previous issuance, and up from 9.8% in the 2014-A trust issued in March 2014.
“We have noticed that the 2014 and subsequent pools appear to be slightly weaker than the 2013 pools,” S&P wrote in the report. “For example, the percentage of loans with 73 to 75[-month] terms has increased, the overall LTV has increased, the percentage of used vehicle has increased, and the percentage of loans with Fico greater than 700 has decreased. This has, in our view, contributed to higher losses on the 2014 pools.” S&P expects the CCART 2015-A transaction to experience a cumulative net loss in the 4.0% to 4.5% range, according to the report.
The trust also has a weighted original Fico Score of 705. However, the majority — 57.2% — of contracts in the pool have a Fico in the 630 to 700 range. The trust has an average seasoning of 4.5 months, up from 2.7 months in the previous CCART 2014-B Trust.
Much like other captive finance companies, Santander Consumer USA Inc., Chrysler Capital’s parent company, is “highly motived to meet certain penetration rates,” according to S&P, which, coupled with the preferred lender agreement between Chrysler Group LLC and Santander, results in an increase in monthly originations volumes, and presents operational challenges. However, the ratings agency wrote that the company had reported “requisite staffing resources” and “highly automated underwriting processes” to help manage growth.
S&P concluded that it “will be closely watching to see how the issuer’s securitized pool credit quality migrates over time and if loss performance matches our expectations.”
Chrysler Capital’s portfolio increased to $3.68 billion as of Dec. 31, 2014, up from approximately $2.32 billion as of Dec. 31, 2013, according to the report, and total delinquencies increased to 3.76% as of Dec. 31, 2014, up from 2.18% a year earlier.
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