KBRA Assigns Preliminary Ratings to U.S. Auto Funding Trust 2022-1

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to five classes of notes issued by U.S. Auto Funding Trust 2022-1 (“USAUT 2022-1”), a subprime auto loan ABS transaction.

USAUT 2022-1 will issue five classes of notes totaling $232.88 million that are collateralized by a pool of retail automobile contracts, made to subprime obligors and secured by used automobiles. Credit enhancement consists of excess spread, overcollateralization, subordination (except for the Class E Notes) and a reserve account funded at closing.

USAUT 2022-1 represents the first ABS securitization in 2022 for U.S. Auto Finance, Inc. (“U.S. Auto” or the “Company”) and their fourth rated term ABS securitization since inception. The Company also issued two unrated deals in September 2017 and October 2018. U.S. Auto will use the net proceeds from the issuance of the notes to pay down existing debt, fund the reserve account, and for general operating purposes.

Founded in 1992, U.S. Auto and its affiliate USASF Servicing LLC (“USASF”), are wholly owned subsidiaries of USASF Holdco, LLC. U.S. Auto is headquartered in Duluth, GA and originates through its 39 dealerships located in Georgia, South Carolina, North Carolina, Florida, Tennessee, and Alabama. U.S. Auto’s business model consists of vehicle acquisition, reconditioning, sales, underwriting, financing, loan servicing and after-sale support. The Company operates a direct lending model in which it originates 100% of loans through its company-owned stores. The Company is majority owned by Milestone Partners, a private equity firm founded in 1995.

KBRA applied its Auto Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure, and U.S. Auto’s historical static pool data. KBRA considered its operational review of U.S. Auto, as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.

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Related Publications

• Auto Loan ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. 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.