First Public Subprime ABS Deal Provides Insights Into CIG Financial

  • William Hoffman
  • November 14, 2017

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.

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