KBRA Assigns Preliminary Ratings to Credit Acceptance Auto Loan Trust 2019-3

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Credit Acceptance Auto Loan Trust 2019-3 (“CAALT 2019-3”), an auto loan ABS transaction.

CAALT 2019-3 will issue three classes of notes totaling $351.70 million that are collateralized by a pool of automobile retail installment contracts made to subprime borrowers. The loans were originated by Credit Acceptance Corporation (“Credit Acceptance”) indirectly through automobile dealers. Credit Acceptance was founded in 1972, has completed 26 144A term ABS transactions and 11 bank-sponsored commercial paper conduit transactions and is publicly traded on the NASDAQ under the symbol CACC.

CAALT 2019-3 includes a 24-month revolving period during which principal collections may be used to purchase new collateral. The transaction has initial credit enhancement levels of 47.58% for the Class A Notes, 32.13% for the Class B Notes, and 21.60% and for the Class C Notes. Credit enhancement consists of overcollateralization, excess spread, a reserve fund funded at closing and subordination (except for the Class C Notes).

KBRA applied its Global Auto Loan ABS methodology and its Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Credit Acceptance’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 review the operative agreements and legal opinions for the transaction prior to closing.

To access ratings, reports and disclosures, click here.

Preliminary Ratings Assigned: Credit Acceptance Auto Loan Trust 2019-3

Class

Preliminary Rating

Initial Principal Balance

A

AAA (sf)

$237,500,000

B

AA (sf)

$67,900,000

C

A (sf)

$46,300,000

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 designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is 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

Analytical Contacts:

William Carson, Senior Director
(646) 731-2405
wcarson@kbra.com

Brendan Carter, Associate Director
(646) 731-3315
bcarter@kbra.com

Rahel Avigdor, Director
(646) 731-1203
ravigdor@kbra.com

Eric Neglia, Managing Director
(646) 731-2456
eneglia@kbra.com

Business Development Contact:

Ted Burbage, Managing Director
(646) 731-3325
tburbage@kbra.com

Contacts

Analytical Contacts:

William Carson, Senior Director
(646) 731-2405
wcarson@kbra.com

Brendan Carter, Associate Director
(646) 731-3315
bcarter@kbra.com

Rahel Avigdor, Director
(646) 731-1203
ravigdor@kbra.com

Eric Neglia, Managing Director
(646) 731-2456
eneglia@kbra.com

Business Development Contact:

Ted Burbage, Managing Director
(646) 731-3325
tburbage@kbra.com