NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes that will be issued from ACC Auto Trust 2021-A (“AUTOT 2021-A”), a subprime auto loan ABS transaction. The preliminary ratings reflect the initial credit enhancement levels ranging from 32.15% for the Class A notes to 7.50% for the Class D notes. Credit enhancement for this transaction will consist of overcollateralization (“O/C”), a reserve account, subordination (except for Class D notes) and excess spread.
AUTOT 2021-A represents the inaugural ABS securitization for Automotive Credit Corporation (“ACC” or the “Company”). AUTOT 2021-A is collateralized by a pool of retail automobile contracts, made to subprime obligors and secured by new and used automobiles and trucks. A portion of the proceeds will be used to repay warehouse facilities and create additional borrowing capacity for future originations.
Headquartered in Southfield, MI, the Company was founded in 1992 by CEO, Jim Blasius, who holds 100% beneficial ownership. ACC originates indirect subprime auto loans by purchasing installment contracts from both independent and franchised dealerships. ACC partners with over 800 dealerships in 30 states. As of May 31, 2021, ACC had total assets of approximately $270 million and shareholder’s equity of approximately $43 million. For the five months ended May 31, 2021, ACC has funded approximately $108 million in originations, which is ahead of their 2020 full year pace where they originated $139 million.
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 and the proposed capital structure. KBRA considered its operational review of ACC, which was conducted in December 2020, as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.
- Auto Loan ABS Global Rating Methodology
- Global Structured Finance Counterparty Methodology
- ESG Global Rating Methodology
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.
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.
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