High FICO scores and extended payments are key to up-and-coming Capital One Prime ABS – Asset Securitization Report
Capital One Prime is launching a $1.899 billion asset-backed security (ABS) that pools vehicle loans across the United States.
Capital One Prime Auto Receivables Trust 2022-1 (COPAR 2022-1) has eight tranches of which seven were rated by FitchRatings in a Thursday presale report. Three were rated ‘AAA,’ including two tranches for $663.19 million and one for $150.73 million. Another $18.99-million tranche is rated ‘A+’ and a second $18.99-million tranche is rated ‘AA+.’ A ‘BBB+’- rated tranche is $18.98 million. FitchRatings analysts Katrina Broski and Pasquale Giordano authored the report.
The principal balance for the collateral of COPAR 2022-1 is $2.025 billion, compared to COPAR 2021-1, the previous transaction, at $1.356 billion.
Capital One, NA (CONA) is the sponsor, originator and administrator of the receivables, FitchRatings said.
FitchRatings wrote that since 2012, CONA’s managed portfolios’ performances have been strong, with low delinquencies and losses. Absolute loss levels remain below .50%.
The lead arranger is Wells Fargo Securities LLC and the owner trustee is BNY Mellon Trust of Delaware.
The 87,939 loans have an average principal balance of $23,037. Texas, California, Florida, Illinois and Georgia are highly represented states.
The noted vehicle brands in COPAR 2022-1 are Toyotas (13.8%), Fords (10.8%) and Chevrolets (10.8%). New vehicles make up 34.35% and used automobiles are 65.65%.The weighted average APR is 3.62. Utility vehicles make up a little more than half.
More than sixty-seven percent of the weighted average FICO scores are above 750, and no borrower has a score below 700.
FitchRatings said that 77.2% of the loans are longer than 61 months. FitchRatings said that the extended-term loans are available to borrowers with an average FICO score of 770.
Overall, FitchRatings’s 2022 asset performance and rating for prime auto loan ABS’ are ‘neutral’ and ‘positive,’ respectively, the report said.
Success could open up a major source of uncorrelated risk to structured-finance investors.
Revenue from operations and benefits from a perfected security interest in the securitized assets comprise the collateral assets.
Seasoning, a strong borrower profile and backup servicer mitigate concerns about SoFi Lending’s credit strength.
Most of the loans in the pool, 56.4%, are not subject to the Consumer Finance Protection Bureau’s (CFPB) Ability to Repay Rule, and virtually all are fixed-rate.
The transaction will devote proceeds to cover costs incurred from the February 2021 winter storm’s fallout.
The decline in loan activity and softening prices also helped drive down builder sentiment for the 11th month in a row.
Up to 27.50% the collateral might be represented by financed units enrolled in the CalCAP program, providing potential coverage for losses on charged off loans.
The San Francisco bank joined Bank of America, U.S. Bancorp and Huntington Bancshares, which have previously introduced similar products. The Pew Charitable Trusts said the loans are a more affordable option for cash-strapped consumers than payday loans and overdraft fees.
MFCCMT 2022-3 includes a 12-month revolving period where no principal payments are made on the notes, except in the event of an early amortization.
PACE sponsors are raising capital and promoting plans to retroactively fund stalled CRE projects amid the COVID-19 outbreak – a potential boost for what has been a shrinking assets class in ABS