GO Financial Preps 2nd ABS Offering With Lower Losses

GO Financial has added $164.6 million of Asset Backed Securities to the pipeline with its second offering this year –also the second offering ever for the company — with slightly lower expected losses, according to a recent Kroll Bond Rating Agency (KBRA) presale report.

In the report KBRA wrote that it analyzed GO Financial’s historical static pool loss data in the aggregate, and broken out by credit grade, in order to develop a base case cumulative net loss range of 33.90% – 35.90% for the pool.

The previous 2015-1 trust had expected losses of 34% – 37%.

The lower losses are a result of the slightly improved collateral characteristics of the loan pool, compared to the previous ABS deal.

GO Financial’s originations have shifted to borrowers with a higher internal credit grade, and the 2015-2 trust contains a greater concentration of loans in the highest credit tiers, and a lower concentration of loan in the lowest credit tier, as compared to 2015-1.

The 2015-2 trust for the Mesa, Ariz.-based subprime lender has a weighted average Fico of 553, up from the previous trust’s 546, and a slightly higher average seasoning – 6 months, up from 5 months previously.

However, the percentage of loans with terms over 60 months is  16.54%, up from 12.43% in the previous trust, resulting in a weighted average original term of 51 months compared to 48 months in GOFAST 2015-1.

The mix in credit enhancements also changed, with initial overcollateralization up 1.25% from the previous trust’s 30%, according to Kroll.

“Annual excess spread, adjusted for overcollateralization, is 12.71%, which is approximately 1.0% lower than GOFAST 2015-1 and is the major factor for the increased enhancement,” Kroll wrote in the report.

The pool’s overall credit enhancements are comprised of 31.25% initial overcollateralization, a 1.50% non-declining cash reserve account, subordination of junior note classes, and excess spread, according to the report.

GO Financial was founded under DriveTime in December 2011, but spun off in December 2013. Go Financial founders DriveTime Chairman Ernie Garcia and President and Chief Executive Ray Fidel retain a 51% ownership after the two sold a 44% stake in GO Financial to Manheim Partner Holding LLC in March 2014 . Manheim has subsequently increased its ownership interest in GO Financial to 49% as of Dec. 31, 2014, according to Kroll.