|
Robert Riedl
|
Consumer Portfolio Services expects to be a programmatic issuer of auto asset-backed securities going into 2012, hitting the market about every three months, Robert Riedl, chief investment officer, told SI. The Irvine, Calif.-based specialty finance company concentrates on purchasing, selling and servicing subprime auto sales contracts. “As we continue to grow originations, we plan on accessing the market on a quarterly basis, as we did from 2003-2007,” Riedl said.
CPS was in the primary market this week with a $119 million auto securitization backed by contracts from subprime borrowers on mostly used autos, light trucks, vans and minivans. The deal priced Dec. 7, and notes are expected to settle Dec. 14.
CPS Auto Receivables Trust 2011-C comprises four tranches, with the $98.4 million A class, rated A/A2 respectively by Standard & Poor’s and Moody’s Investors Service priced to yield 4.25%. The $9.6 million B class (BBB/Baa2) priced to yield 6.5%; the $6 million C class (BB/Ba2) at 8.25%; and the $5.4 million D class (B+/B2) at 10.5%.
The transaction marks the sponsor’s third securitization for 2011.
The issuer sponsored just one transaction in 2010 and 2008, and none in 2009. “We lost access to our warehouse facility so we had to really scale back,” he explained. Currently, CPS purchases about $30 million in new paper each month, and anticipates increasing that amount to $40-50 million each month next year, Riedl said. CPS has issued $6.9 billion in term ABS since 1994.
The most significant difference between this deal and CPS’s most recent transaction is a pre-funding component. CPS will deliver $84 million of the collateral by next week’s closing and another $36 million by the end of January. “It basically allows you to lock in long-term funding today for contracts that will contribute into the deal over the next month or so and to spread fixed cost over a larger issuance,” Riedl explained. “It’s an interest rate....