CPS Issuance Shows Shorter Loan Terms, Rising Delinquencies

  • William Hoffman
  • January 10, 2017
The Bull

The BullConsumer Portfolio Services Inc. issued its first securitization of the new year backed by $206.32 million in subprime auto loan receivables, according to S&P Global.

Most notably, no loans in the trust have terms longer than 72 months, compared with the 2016-D issuance, which allowed for up to 6.5% of the pool to be made up of 75-month contracts, according to S&P. Furthermore, the percentage of contracts with 60-month term limits decreased to 74.4%, compared with 76.5% the prior transaction.

Despite shorter loan terms and the company’s history of weathering economic downturns, S&P predicts losses of 17% to 18% due to rising delinquencies in the subprime space.

Between 2012 and 2014, many of these issuances were given an initial cumulative new loss rate of 13% to 15%, but nearly all have since been revised up to the 17% to 18% range, according to S&P documents.  

Total portfolio delinquencies, including repossessed assets, increased to 10.46% as of Sept. 30 from 8.81% one year earlier, S&P’s report states. Management cites the regulatory environment as the major factor, but the New York Federal Reserve noted increased subprime delinquencies across the industry back in November.

This is the second securitization backed by auto assets of the new year, following an auto lease-backed issuance by Hyundai Capital America last week.

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