KBRA Assigns Ratings to Subprime Auto ABS

By Staff Writer July 22, 2021

Kroll Bond Rating Agency has assigned preliminary ratings to four classes of notes that will be issued from ACC Auto Trust 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, a reserve account, subordination (except for Class D notes) and excess spread.

AUTOT 2021-A represents the inaugural ABS securitization for Automotive Credit Corporation. 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, Mich., ACC 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, ACC had total assets of approximately $270 million and shareholder’s equity of approximately $43 million. For the five months ended May 31, 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.

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Last modified on Wednesday, 28 July 2021 15:32