CPS Announces $416.82 Million Senior Subordinate Asset-Backed Securitization

Rhea-AI Summary

Consumer Portfolio Services (CPSS) has closed its fourth term securitization of 2024, totaling $416.82 million in asset-backed notes secured by $436.00 million in automobile receivables. This marks the company's 53rd senior subordinate securitization since 2011 and the 36th consecutive to receive a triple 'A' rating from at least two rating agencies on the senior class of notes.

The transaction, CPS Auto Receivables Trust 2024-D, consists of five note classes with varying interest rates and average lives. The weighted average coupon on the notes is approximately 5.52%. Initial credit enhancement includes a 1.00% cash deposit and 4.40% overcollateralization. The deal utilizes a pre-funding structure, with CPS selling $298.42 million of receivables at inception and planning to sell an additional $137.58 million in October 2024.

Positive

• Successful closing of fourth term securitization in 2024, totaling $416.82 million
• 36th consecutive securitization to receive triple 'A' rating on senior class notes
• Pre-funding structure allows for additional $137.58 million in receivables to be sold in October 2024
• Initial credit enhancement with 1.00% cash deposit and 4.40% overcollateralization

Negative

• None.

Insights

Financial Analyst

This securitization deal is positive for CPS, demonstrating continued access to capital markets and investor confidence. The $416.82 million transaction, CPS's 4th in 2024, showcases strong demand for their asset-backed securities. The triple "A" rating on senior notes reflects the quality of CPS's receivables and their servicing expertise. The pre-funding structure allows CPS to finance future receivables, providing flexibility in their operations. The weighted average coupon of 5.52% is competitive in the current market environment. The overcollateralization and cash deposit provide a solid credit enhancement structure, potentially reducing investor risk. This deal should strengthen CPS's liquidity position and support continued growth in their auto financing business.

Credit Risk Analyst

While the securitization is generally positive, there are some risk factors to consider. The use of a pre-funding structure, with $137.58 million of additional receivables to be sold in October, introduces some uncertainty. The performance of these future receivables could impact the overall pool quality. The tiered credit enhancement structure, starting at 4.40% overcollateralization and potentially increasing to 9.00%, suggests some anticipated credit risk in the underlying receivables. CPS's focus on subprime auto loans (individuals with past credit problems) inherently carries higher risk. Investors should monitor the performance of this securitization, particularly delinquency and default rates, as economic conditions can significantly impact this consumer segment.

LAS VEGAS, Sept. 17, 2024 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) announced the closing of its fourth term securitization in 2024 on Tuesday, September 17, 2024. The transaction is CPS's 53rd senior subordinate securitization since the beginning of 2011 and the 36^th consecutive securitization to receive a triple “A” rating from at least two rating agencies on the senior class of notes.

In the transaction, qualified institutional buyers purchased $416.82 million of asset-backed notes secured by $436.00 million in automobile receivables originated by CPS. The sold notes, issued by CPS Auto Receivables Trust 2024-D, consist of five classes. Ratings of the notes were provided by Standard & Poor’s and DBRS Morningstar, and were based on the structure of the transaction, the historical performance of similar receivables and CPS’s experience as a servicer.

Note Class	Amount (in millions)		Interest Rate	Average Life (years)	Price	S&P’s Rating	DBRS Rating
A	$188.352		4.91%	0.71	99.99769%	AAA	AAA
B	$56.240		4.65%	1.75	99.98733%	AA	AA
C	$71.944		4.76%	2.43	99.98758%	A	A
D	$45.998		5.14%	3.29	99.97155%	BBB	BBB
E	$54.282		7.13%	4.13	99.99232%	NR	BB

The weighted average coupon on the notes is approximately 5.52%.  

The 2024-D transaction has initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance and overcollateralization of 4.40%. The transaction agreements require accelerated payment of principal on the notes to reach overcollateralization of the lesser of 9.00% of the original receivable pool balance, or 25.60% of the then outstanding pool balance.        

The transaction utilizes a pre-funding structure, in which CPS sold approximately $298.42 million of receivables at inception and plans to sell approximately $137.58 million of additional receivables in October 2024. This further sale is intended to provide CPS with long-term financing for receivables purchased primarily in the month of September.

The transaction was a private offering of securities, not registered under the Securities Act of 1933, or any state securities law. All such securities having been sold, this announcement of their sale appears as a matter of record only.

About Consumer Portfolio Services, Inc.

Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives.

Investor Relations Contact

Danny Bharwani, Chief Financial Officer
949-753-6811

FAQ

What is the total value of CPS's latest securitization (CPSS)?

Consumer Portfolio Services' latest securitization, CPS Auto Receivables Trust 2024-D, totals $416.82 million in asset-backed notes secured by $436.00 million in automobile receivables.

How many securitizations has CPS (CPSS) completed since 2011?

Consumer Portfolio Services has completed 53 senior subordinate securitizations since the beginning of 2011.

What is the weighted average coupon on the notes for CPS's 2024-D securitization (CPSS)?

The weighted average coupon on the notes for CPS Auto Receivables Trust 2024-D is approximately 5.52%.

What is the pre-funding structure in CPS's latest securitization (CPSS)?

CPS sold $298.42 million of receivables at inception and plans to sell an additional $137.58 million in October 2024, providing long-term financing for receivables purchased primarily in September.