Westlake Financial Services issued an $800 million asset-backed securitization on Monday backed by $860 million of automotive loans, marking the largest ABS in the company’s 39-year history.
“This ABS trumps the most recent securitization completed back in March 2017, which was — at the time — our largest ABS ever issued of $700 million,” Paul Kerwin, Westlake’s chief financial officer, said in a statement.
Originations have grown, in particular from franchise dealers, according to a presale report from DBRS ratings. As of June 2017, the two business channels account for 70% and 30% for independent and franchise, respectively. In the March securitization, independent and franchise dealers accounted for 62% and 38% of the pool.
Additionally, the weighted average Fico for Westlake Automobile Receivables Trust 2017-2 (WLAKE 2017-2) decreased slightly to 596, from 599 in March transaction. The mix of Gold and Platinum receivables has also decreased to 38.4% from 41.6%. Westlake Financial’s Gold program is for customers with a 600 to 699 Fico, and its Platinum program is for customers with a 700 or higher Fico, according to the presale report.
“We increased our deal by $100 million with 37 investors on WLAKE 2017-2, which is a reflection of continuous investor demand for Westlake’s ABS,” Sean Morgan, associate vice president of finance at Westlake Financial, also said in the statement. Loans in the pool have an average size of $11,111, up slightly from $11,071 in March, and the average term is 49 months, up from 48 in March, according to DBRS.
Westlake’s largest-ever securitization has an expected annualized cost of 2.65%, including the initial purchaser’s fees, which is in-line with prior ABS deals, despite higher benchmark interest rates according to the company. Westlake maintains six borrowing facilities funded by 10 banks with a combined capacity of about $1.5 billion to support continued growth in its full-spectrum lending platform. Westlake’s current portfolio of $4 billion includes originated auto loans, portfolio purchases, and dealer flooring lines.
