Carvana will adopt a two-shelf securitization structure in 2020, said Chief Financial Officer Mark Jenkins during the company’s Feb. 26 earnings call. The online retailer utilized a one-shelf structure last year.
The Tempe, Az.-based lender first entered the secondary market in March 2019 with a $350 million transaction, and followed again in June, September and December, injecting the market with a total of $1.94 billion in collateralized assets. Transition to a multishelf platform will allow Carvana to securitize more frequently and provide the lender with additional capital to underwrite loans. Santander Consumer USA, Ford Credit and Toyota Motor Credit Corp. use similar multishelf structures.
“Our transition to two shelves is a valuable step forward for our securitization program that we believe will unlock an expanded investor base, greater liquidity, more efficient capital structures and lower cost of funds over time,” Jenkins explained.
In order to prepare for the forthcoming change, Carvana held back $110 million worth of loans that it plans to sell in the first quarter, Jenkins said. The lender also closed two, new, revolving facilities with a capacity of $1 billion it plans on using to finance loans prior to issuing further transactions.
Carvana’s originations shot up last year, increasing 115% year over year to $1.9 billion in the third quarter alone, according to earnings reports.
A company spokeswoman declined to share additional details about the program at press time.
