CPS Announces $419.95 Million Senior Subordinate Asset-Backed Securitization

Rhea-AI Summary

Consumer Portfolio Services (NASDAQ: CPSS) has successfully closed its second term securitization of 2025, marking its 55th senior subordinate securitization since 2011. The transaction involved $419.95 million of asset-backed notes secured by $439.29 million in automobile receivables. The notes were issued through CPS Auto Receivables Trust 2025-B in five classes, with the senior class receiving triple "A" ratings from both Standard & Poor's and DBRS Morningstar.

The notes carry a weighted average coupon of 5.96% and feature initial credit enhancement including a 1.00% cash deposit and 4.40% overcollateralization. The transaction requires accelerated principal payments to achieve overcollateralization of either 8.65% of the original receivable pool balance or 22.00% of the outstanding pool balance, whichever is lesser.

Positive

• Achieved triple 'A' rating from two agencies for the senior class of notes, marking the 38th consecutive securitization with this achievement
• Strong credit enhancement structure with 1.00% cash deposit and 4.40% initial overcollateralization
• Successful placement of $419.95 million in asset-backed notes, demonstrating continued market access

Negative

• Relatively high weighted average coupon rate of 5.96% indicates increased borrowing costs
• Exposure to credit risk from borrowers with past credit problems or limited credit histories

Insights

Financial Analyst

CPSS secured $419.95M through securitizing auto loans with favorable ratings, indicating strong market confidence and financial stability.

The completion of CPSS's second term securitization in 2025 represents a significant financial milestone, marking their 55th senior subordinate securitization since 2011 and 38th consecutive securitization with triple "A" ratings from major agencies. This consistent achievement demonstrates remarkable stability in their underwriting standards and servicing capabilities.

The transaction's structure reveals several positive indicators. The $419.95 million in asset-backed notes are secured by $439.29 million in automobile receivables, creating an initial overcollateralization of 4.40%. Combined with a 1.00% cash deposit, this provides a reasonable protection layer for investors. The transaction agreements require accelerated principal payments to reach an overcollateralization target of 8.65% of the original pool or 22.00% of the outstanding pool balance, whichever is less.

The weighted average coupon of 5.96% across the five note classes appears competitive in the current market environment. The AAA-rated Class A notes, representing approximately 45.6% of the offering, priced at 4.74%, reflecting strong investor confidence in the senior tranche. The sequential pricing structure across tranches - from 4.74% for Class A to 7.95% for Class E - demonstrates appropriate risk-based pricing.

This transaction underscores CPSS's continued access to the securitization markets, which is crucial for their business model of purchasing retail installment contracts from auto dealerships and funding them through securitizations. The company's ability to consistently complete these transactions suggests they maintain strong relationships with institutional investors and have established a reliable funding mechanism for their core operations.

LAS VEGAS, Nevada, May 12, 2025 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) announced the closing of its second term securitization in 2025 on Monday May 12, 2025. The transaction is CPS's 55th senior subordinate securitization since the beginning of 2011 and the 38th 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 $419.95 million of asset-backed notes secured by $439.29 million in automobile receivables originated by CPS. The sold notes, issued by CPS Auto Receivables Trust 2025-B, 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	$ 191.520		4.74%		0.65	99.99620%		AAA	AAA
B	$ 58.430		4.79%		1.75	99.99344%		AA	AA
C	$ 70.280		5.12%		2.43	99.97744%		A	A
D	$ 40.640		5.56%		3.23	99.97917%		BBB	BBB
E	$ 59.080		7.95%		3.98	99.99266%		NR	BB

The weighted average coupon on the notes is approximately 5.96%.

The 2025-B 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 8.65% of the original receivable pool balance, or 22.00% of the then outstanding pool balance.

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 size of CPSS's latest securitization in 2025?

Consumer Portfolio Services' latest securitization (2025-B) is $419.95 million, secured by $439.29 million in automobile receivables.

What are the credit ratings for CPSS's 2025-B securitization notes?

The senior Class A notes received AAA ratings from both S&P and DBRS Morningstar, with subsequent classes rated from AA to BB, depending on the tranche.

What is the weighted average coupon rate for CPSS's 2025-B securitization?

The weighted average coupon rate for the notes is approximately 5.96%.

What credit enhancement features are included in CPSS's 2025-B securitization?

The securitization includes a 1.00% cash deposit of the original receivable pool balance and 4.40% overcollateralization, with requirements for accelerated principal payments to reach higher overcollateralization levels.

How many securitizations has CPSS completed since 2011?

This is CPS's 55th senior subordinate securitization since the beginning of 2011.