Kroll Bond Rating Agency Assigns Preliminary Ratings to CarFinance Capital Auto Trust 2014-2

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of CarFinance Capital Auto Trust 2014-2 (“CFCAT 2014-2”), a subprime auto asset-backed securities transaction.

The collateral in the CFCAT 2014-2 deal includes approximately $154.7 million of loans, as of June 30, 2014 and is expected to contain approximately $195.0 million of loans at closing. The transaction includes a prefunding feature that allows up to 20% of the collateral pool to be purchased up to November 1, 2014. The preliminary ratings reflect the initial credit enhancement levels ranging from 20.00% for the Class A notes to 3.50% for the Class E notes, which build to 25.50% and 9.00% for the Class A and Class E notes, respectively. The target enhancement levels will increase to 30.50% for the Class A notes down to 14.00% for the Class E notes if there is a breach of the cumulative net loss trigger in the transaction.

CarFinance Capital (“CarFinance”) is a specialty auto finance company headquartered in Irvine, CA that was established in March 2011 and is indirectly owned by affiliated funds of Perella Weinberg Partners’ Asset Based Value Strategy and CarFinance’s senior management. CarFinance’s management team is headed by Jim Landy, who was the co-founder and CEO of Triad Financial and most recently, the CEO of Fireside Bank, a former subsidiary of Unitrin. CarFinance focuses its origination strategy through two primary channels: (1) the indirect channel, through primarily franchise auto dealers that are established and maintained by local sales representatives, and (2) the direct channel, which is directly to consumers through its website, and bank and online partnerships.

KBRA applied its U.S. Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and CarFinance’s historical static pool data. KBRA also conducted an operational assessment of CarFinance, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, CarFinance Capital Auto Trust 2014-2 Pre-Sale Report which was published today at www.krollbondratings.com.

Preliminary Ratings Assigned: CarFinance Capital Auto Trust 2014-2

 
Class   Rating   Expected Initial Class Principal
A   AA-(sf)   $191,880,000
B   A(sf)   $15,210,000
C   A-(sf)   $9,360,000
D   BBB(sf)   $7,610,000
E   BB+(sf)   $6,440,000
   

17g-7 Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report: CarFinance Capital Auto Trust 2014-2 17g-7 Disclosure Report.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

KBRA
Analytical Contacts:
Rosemary Kelley, 646-731-2337
rkelley@kbra.com
or
William Carson, 646-731-2405
wcarson@kbra.com
or
Yuting Zhang, 646-731-2406
yzhang@kbra.com

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Contacts

KBRA
Analytical Contacts:
Rosemary Kelley, 646-731-2337
rkelley@kbra.com
or
William Carson, 646-731-2405
wcarson@kbra.com
or
Yuting Zhang, 646-731-2406
yzhang@kbra.com