World Omni Financial prepares around $ 1.7 billion in automatic ABS issuance


World Omni Financial Corp. enters the auto-lending ABS market with a jumbo transaction potentially securitizing two collateral pools that Fitch Ratings says have a higher credit quality than other sub-risk auto-lending transactions.

Fitch noted in a recent pre-sale report that the World Omni Select Auto Trust (WOSAT) 2021-A deal will be primarily supported by subprime retail installment loans on new and used cars and light trucks manufactured primarily. by Toyota and from World Omni. The bond tranches are expected to total $ 798.42 million and $ 1,008.06 million, including the fourth WOSAT transaction, the last of which was rated by Fitch in September 2020.

MUFG Securities Americas Inc. is the structuring lead underwriter, with Mizuho Securities, TD Securities and Truist Bank acting as joint lead managers, according to Finsight. Fitch rates MUFG at A / F1, with a negative rating outlook.

The loan pool also contains blue chip loans which, along with the majority of subprime loans, have a weighted average FICO score of 647, up from 641 in the 2020 deal, Fitch said. The rating agency notes that 78-month loans have increased to around 20% in the current agreement, up from 15% in the last, and although these loans have limited performance data due to a lack of experience, they have a high grade point average. FICO of 759.

“Overall, the credit quality of this pool is superior to other subprime auto loan transactions rated by Fitch, including past WOSAT transactions,” Fitch said in the September 7 report. “The performance of 2021-A is expected to be stronger with lower losses compared to previous WOSAT transactions due to the improved credit quality of the pool. “

The initial improvement in firm credit, while comparable, is expected to be lower than recently issued Fitch-rated subprime auto loan transactions, including past WOSAT transactions. Fitch noted, however, that “loss coverage levels remain adequate relative to Fitch’s loss indicator for expected ratings.”

The transaction has no Libor exposure as the assets and liabilities are at a fixed rate.

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