CIG Financial, a private subprime indirect lender, has grown its portfolio 11.7% year over year to $193 million outstanding in the nine-month period ending in September, according to the company’s first securitization report.
The issuance is backed by $179 million worth of used subprime loans with an average weighted Fico score of 591, according to the pre-sale report from Moody’s Investors Service. The rating agency is assuming 10% in losses on the pool.
Because of the concentration of high-mileage vehicles in the pool, DBRS is expecting a recovery rate of just 35%, where the company has previously performed at over a 50% recovery rate for its portfolio. Vehicles with more than 100,000 miles make up 28% of the pool with a maximum of 197,387 miles, according to the pre-sale report from DBRS.
The rating reports also provide insights into the company’s overall portfolio, such as rising delinquencies and losses.
Total delinquencies as a percentage of the company’s portfolio rose to 3.7% for the nine-month period ending in September, compared with 3% during the same period the year prior, according to the Moody’s report. Similarly, net losses as a percentage of the overall portfolio rose to 3.6%, compared with 3.2% in 2016.
While this is CIG Financial’s first public securitization, the company has previously issued three private ABS deals, according to DBRS. Additionally, the company was founded in 1985 and has weathered a number of credit downturns, the Moody’s report notes.
CIG Financial made a shift to focus almost exclusively on indirect auto loans in 2010, and since then has expanded beyond its home state of California to 18 additional states at 1,600 dealerships.Like This Post