CPS Announces $319.9 Million Senior Subordinate Asset-Backed Securitization

Rhea-AI Summary

Consumer Portfolio Services, Inc. (Nasdaq: CPSS) announced the closing of its 51st securitization, totaling $319.9 million in automobile receivables, with a triple 'A' rating. The transaction involved the sale of five note classes to institutional buyers, structured with initial credit enhancement and overcollateralization.

Positive

• CPS successfully closed its 51st securitization with a $319.9 million deal.
• The transaction received a triple 'A' rating on the senior class of notes.
• Qualified institutional buyers purchased $319.9 million of asset-backed notes secured by $337.2 million in automobile receivables originated by CPS.
• The transaction was CPS's 34th consecutive securitization to receive a triple 'A' rating from at least two rating agencies.
• Ratings for the notes were provided by Standard & Poor’s and DBRS Morningstar based on the structure of the transaction and historical performance of similar receivables.
• The note classes had varying amounts, interest rates, and average lives, with a weighted average coupon of approximately 6.69%.
• The 2024-B transaction included initial credit enhancement of 1.00% of the original receivable pool balance and overcollateralization of 5.15%.
• The transaction agreements outlined requirements for accelerated principal payments to reach specified overcollateralization levels.
• The transaction was a private offering of securities, not registered under the Securities Act of 1933 or any state securities law.

Negative

• None.

Insights

Financial Analyst

Examining the details of Consumer Portfolio Services' recent asset-backed securitization, we see a significant capital influx of $319.9 million, which indicates an aggressive move to liquidate receivables and manage cash flow. The high ratings from S&P and DBRS Morningstar reflect a vote of confidence in CPS's credit operations, suggesting that the company maintains robust underwriting standards. This transaction doesn't just shore up the company's balance sheet but also communicates to the market that CPS is capable of garnering institutional trust, a factor that investors should weigh when considering the strength and stability of their portfolio.

Securitization Specialist

Delving into the specifics of the securitization structure, the tiering of note classes with different interest rates and average lives mirrors the disciplined approach CPS has towards risk management. The initial credit enhancement features, such as the cash deposit and overcollateralization, are designed to protect investors from potential losses, indicating a conservative and investor-friendly approach. Moreover, the accelerated payment requirement tied to overcollateralization ratios is a prudent measure to ensure the notes' safety. Investors might find this complexity reassuring, suggesting a meticulous and transparent process, which likely contributed to the triple-A rating on the senior notes.

LAS VEGAS, Nevada, April 23, 2024 (GLOBE NEWSWIRE) -- Consumer Portfolio Services, Inc. (Nasdaq: CPSS) (“CPS” or the “Company”) announced the closing of its second term securitization in 2024 on Tuesday April 23, 2024. The transaction is CPS's 51st senior subordinate securitization since the beginning of 2011 and the 34th 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 $319.9 million of asset-backed notes secured by $337.2 million in automobile receivables originated by CPS.   The sold notes, issued by CPS Auto Receivables Trust 2024-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	$146.361		5.78%	0.68	99.99509%	AAA	AAA
B	$44.510		6.04%	1.76	99.99298%	AA	AA
C	$56.325		6.28%	2.46	99.99526%	A	A
D	$38.445		6.42%	3.39	99.98396%	BBB	BBB
E	$34.230		8.36%	4.11	99.99365%	NR	BB

The weighted average coupon on the notes is approximately 6.69%.  

The 2024-B transaction has initial credit enhancement consisting of a cash deposit equal to 1.00% of the original receivable pool balance and overcollateralization of 5.15%. The transaction agreements require accelerated payment of principal on the notes to reach overcollateralization of the lesser of 8.40% of the original receivable pool balance, or 23.15% 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 was the total amount of the securitization deal announced by CPS?

Consumer Portfolio Services, Inc. (Nasdaq: CPSS) announced a $319.9 million securitization deal.

How many note classes were included in the securitization transaction by CPS?

The securitization transaction by CPS included five note classes.

What was the weighted average coupon on the notes issued in the 2024-B transaction by CPS?

The weighted average coupon on the notes issued in the 2024-B transaction by CPS was approximately 6.69%.

Were the securities offered in the transaction by CPS registered under the Securities Act of 1933?

The securities offered in the transaction by CPS were a private offering and were not registered under the Securities Act of 1933.

Which rating agencies provided ratings for the notes in the securitization deal announced by CPS?

Standard & Poor’s and DBRS Morningstar provided ratings for the notes in the securitization deal announced by CPS.