Prestige fund lending to bankrupt borrowers with latest automotive ABS deal

Prestige Auto Receivables Trust returns with a $378.2 million securitization agreement, secured by a pool of retail contracts on new and used vehicles.

The platform is no stranger to the securitization industry, and the Prestige Auto Receivables Trust, 2022-1, is the 21st term securitization of the program, according to Morningstar | DBRS.

The final pool of claims will equal approximately $415.7 million, as of the September 30 deadline. The securitization pool balance will exceed the aggregate principal amount of the collateral pool notes issued by 9.00%, according to DBRS.

Prestige was launched in 1994 and serves subprime borrowers who are currently bankrupt. In a notable change for PART 2022-1, the bankruptcy guarantee percentage decreased to 18.58%, from 44.27% in PART 2021-1, according to a pre-sale report from S&P Global Ratings. Also, new vehicles represent 5.34% of the PART 2022-1 fleet, compared to 10.57% during the 2021-1 transaction.

On average, the collateral has an outstanding balance of $20,474, an original loan term of 71 months, and an annual percentage rate of 19.54%, the highest since PART 2016-1. The warranty also has a weighted average seasoning (WA) of 4.7 months, down from 9.6 months.

The loan-to-value ratio held steady at 127%, compared to PART 2021-1, and which was down from the 132% to 133% range held by a series of transactions since 2016-1, according to DBRS. .

Citibank is the bank account provider, indentured trustee and backup manager of the agreement, which is structured as a Rule 144a transaction. PART 2022-1 will issue notes to investors through seven classes of notes.

According to DBRS, the trust will reimburse investors through a senior-subordinated structure, on a pro rata basis, to the trust deed and owner trustees, and then fees and expenses to the administrator. After that, the trust will pay interest to Class A-1, A-2 and A-3 noteholders on a pari passu basis, then interest to Class B notes. After that, the trust will start paying principal applicable Class A and Class B tickets. Payments will follow a similar pattern for the rest of the tranches.

PART 2022-1 benefits from several forms of credit enhancement, including subordination, a reserve account that will be funded at at least 1.00% of the initial pool balance and an excess spread equal to 9.36%, depending on DBRS.