KBRA Assigns Preliminary Ratings to Notes Issued by First Investors Auto Owner Trust 2018-1

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by First Investors Auto Owner Trust 2018-1 (FIAOT 2018-1), an auto loan ABS transaction.

FIAOT 2018-1 is collateralized by approximately $103.9 million of subprime auto loan receivables as of March 31, 2018 out of an expected collateral balance of approximately $163.5 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to $30.7 million to be funded after closing. The prefunding period is three months but is expected to be completed well in advance of the three months based on current origination volume. The preliminary ratings reflect the initial credit enhancement levels of 37.75% for the Class A notes, 30.25% for the Class B notes, 20.26% for the Class C notes, 12.25% for the Class D notes, 7.25% for the Class E notes, and 2.65% for the Class F notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves and excess spread. This transaction is First Investors’ first securitization in 2018 and its twenty third securitization overall.

FIAOT 2018-1 is the first securitization to include loans originated through a partnership First Investors formed with LendingClub Corporation in June 2017, which facilitates First Investors purchase of direct refinance loans originated by WebBank, Inc. through LendingClub’s platform. These loans are originated utilizing First Investors’ underwriting scorecard which has been reviewed and approved by WebBank.

First Investors is an experienced and capable originator and servicer of subprime auto loans. The company was founded over 30 years ago and has benefitted from a stable and experienced management team, which has managed its business through several economic cycles.

KBRA applied its Global Auto Loan ABS Rating methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and First Investors’ 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, First Investors Auto Owner Trust 2018-1 Pre-Sale Report, which was published today at www.kbra.com.

 

Preliminary Ratings Assigned: First Investors Auto Owner Trust 2018-1

       
Class     Rating    

Expected Initial
Principal Balance

A-1     AAA (sf)     $86,335,000
A-2     AAA (sf)     $17,910,000
B     AA+ (sf)     $12,260,000
C     A (sf)     $16,345,000
D     BBB+ (sf)     $13,085,000
E     BB+ (sf)     $8,175,000
F     B (sf)     $7,529,000
 

Representations & Warranties 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 available here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Haksun Kim, Director
(646) 731-2412
hkim@kbra.com
or
William Carson, Senior Director
(646) 731-2405
wcarson@kbra.com
or
Rosemary Kelley, Senior Managing Director
(646) 731-2337
rkelley@kbra.com
or
Michael Polvere, Analyst
(646) 731-3339
mpolvere@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Haksun Kim, Director
(646) 731-2412
hkim@kbra.com
or
William Carson, Senior Director
(646) 731-2405
wcarson@kbra.com
or
Rosemary Kelley, Senior Managing Director
(646) 731-2337
rkelley@kbra.com
or
Michael Polvere, Analyst
(646) 731-3339
mpolvere@kbra.com