A pool of subprime auto loan receivables will underwrite $1.6 billion of Westlake Automobile Receivables Trust’s asset-backed securities (ABS), 2022-3.
Westlake Services originated the loans underlying the transaction and acts as sponsor, manager and custodian of the trust’s assets, according to S&P Global Ratings.
The trust will primarily issue fixed-rate notes to investors through a senior-subordinated structure with several key collateral changes from previous transactions. On the one hand, according to S&P Global Ratings, the concentration of the gold and platinum programs was 39.57% and 4.95%, respectively, which represents an increase of 38.68% and 2.29%, respectively, compared to the Westlake 2022-2 collateral pool, according to S&P.
In another change, Westlake 2022-3 has a lower percentage of auto loans with original terms of 61 to 72 months, 44.39%, compared to 56.06% in the previous agreement. Seasoning is also shorter on a weighted average (WA) basis, at 4.60 months, compared to 3.59 months.
Also on a WA basis, the collateral in Westlake 2022-3 has a payout-to-income ratio of 14.04%, down from 15.13%; a non-zero credit score of 613, an increase from 606; and an average loan-to-value ratio of 110.26%, compared to 112.54%.
The source of loans shifted from franchise dealers to independent dealers, with franchise and independent dealers accounting for 34.41% and 65.59% of the pool, respectively. In the program’s previous agreement, franchise and independent executives accounted for 40.82% and 59.18%, respectively.
About 106,545 claims make up the collateral pool, according to S&P, and they have an average principal balance of $15,054.
The pool has a significant concentration of assets, by geographic location. Similar to previous Westlake transactions, Texas, California and Florida together represent a plurality of assets in the pool. In Westlake 2022-3, Texas is the state with the highest loan concentration in the pool, at 19.20%. Florida and California follow, with 16.28% and 12.72% respectively, for a total concentration of 48.20%.
S&P plans to assign ratings of “A-1+” to Class A-1 Notes; ‘AAA’ on class A-2 and A-3 tickets; ‘AA’ on Class B tickets; ‘A’ on class C tickets; and “BBB” and “BB” on Class D and E tickets, respectively.