Santander Consumer USA’s Drive platform had the lowest LTV rate in its latest securitization than all the previous Drive asset-backed transactions, according to a presale report by Moody’s Investor Service.
The weighted average LTV was 106% in the Drive Auto Receivables Trust 2017-2, down from 109% in the Drive 2017-1 transaction and down from 112% in the 2016-A issuance.
The 2017-2 ABS marks the Drive platform’s second public securitization, which is backed by $1.2 billion of subprime auto loans and received an AAA rating, according to Moody’s.
However, the latest transaction also featured a lower weighted-average Fico of 568, compared with 570 in the previous issuance. Yet, the average Fico still remains, “Significantly higher than the previous five DRIVE deals before 2017-1,” according to the presale. By comparison, the weighted average Fico for the 2016-A issuance was 550.
“Our expected loss of 27% for the pool is based, in part, on the credit quality of the obligors and is the highest expected loss for the auto loan-backed securitizations we rate,” Moody’s said in the report.
Also of note, the latest transaction also features a higher concentration of extend-term loans. Original term loans of 73 to 75 months account for 15.6%, up from 0.5% on the company’s previous issuance, according to the report.
Additionally, the ABS showed a change in the mix of new and used cars in favor of more pre-owned vehicles. The new-to-used mix shifted to 40% and 60%, respectively, compared with 24% and 76% in the previous issuance.
Dallas, Texas-based DRIVE has a $3 billion subprime auto portfolio originated from more than 10,000 dealer partners throughout North America.
