Kroll Bond Rating Agency Assigns Preliminary Ratings to American Credit Acceptance Receivables Trust 2014-4

NEW YORK--()--Kroll Bond Rating Agency (“KBRA”) assigns preliminary ratings to four classes of American Credit Acceptance Receivables Trust 2014-4 (“ACAR 2014-4”), an auto loan ABS transaction.

ACAR 2014-4 is expected to be collateralized by approximately $164.0 million of subprime auto loan receivables at closing out of an expected collateral balance of approximately $210.25 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to $46.25 million, or 22.0%, of the collateral pool to be funded after closing. The prefunding period is three months but is expected to be completed by January 2015. The preliminary ratings reflect the initial credit enhancement levels of 53.75% for the Class A notes, 36.75% for the Class B notes, 23.00% for the Class C notes and 17.25% for the Class D notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves and excess spread. This transaction is American Credit Acceptance (“ACA”)’s fourth securitization in 2014 and its tenth securitization overall.

ACA is an experienced and capable originator and servicer of subprime auto loans. The company was founded in 2007 by George Johnson, the majority owner, who acquired Cornerstone Acceptance Corporation from Sonic Automotive Inc. The Company has built its financing and servicing platform through the acquisitions of companies and portfolios over the past 7 years and the Company’s predecessors have been in business since 1989. ACA is led by an experienced management team with diverse backgrounds including capital markets, consumer risk analysis, compliance and corporate finance. The Company continues to build its managed portfolio through indirect marketing channels and strategic partnerships. ACA purchases and services this portfolio from its headquarters in Spartanburg, SC and a servicing office in Atlanta, GA.

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 ACA’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, 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, American Credit Acceptance Receivables Trust 2014-4 Pre-Sale Report, which was published today at www.kbra.com.

Preliminary Ratings Assigned: American Credit Acceptance Receivables Trust 2014-4

Class Rating Expected Initial Principal Balance
A AA(sf) $101,450,000
B A(sf) $35,740,000
C BBB(sf) $28,910,000
D BB(sf) $12,090,000

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: American Credit Acceptance Receivables Trust 2014-4 17g-7 Disclosure Report

Related Publications:

U.S. Auto Loan ABS Rating Methodology

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

Analytical:
Rosemary Kelley, 646-731-2337
rkelley@kbra.com
or
William Carson, 646-731-2405
wcarson@kbra.com

Follow us on Twitter!
@KrollBondRating

Contacts

Analytical:
Rosemary Kelley, 646-731-2337
rkelley@kbra.com
or
William Carson, 646-731-2405
wcarson@kbra.com

Follow us on Twitter!
@KrollBondRating