KBRA Rates Avid Automobile Receivables

By Staff Writer October 13, 2021

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of notes issued by Avid Automobile Receivables Trust 2021-1, an asset-backed securitization collateralized by a pool of auto loans.

AVID 2021-1 will issue six classes of notes totaling $140.009 million. This transaction represents the first term ABS securitization in 2021 and third overall for Avid Acceptance, LLC. The notes are backed by a pool of retail automobile contracts made to subprime obligors, the majority of which have filed for bankruptcy (Chapter 7 or 13) and have decided to purchase a vehicle prior to the closing or discharge of their bankruptcy case.

This transaction includes a prefunding account that will be used to purchase additional receivables up to the sum of 25% of the closing date pool balance plus the expected balance of the subsequent receivables purchased for up to six months after closing. The preliminary ratings reflect initial credit enhancement levels of 49.65% for the Class A notes, 39.65% for the Class B notes, 25.25% for the Class C notes, 15.30% for the Class D notes, 8.80% for the Class E notes and 1.50% for the Class F notes. Credit enhancement consists of overcollateralization, subordination (except for the Class F notes), a reserve account funded at closing and excess spread.

Avid was established in 2009 to purchase and service retail automobile contracts originated by franchised and select independent dealers within the United States. Avid is a part of the Avtech Financial Group, which is owned by Avid’s co-founder and Chairman Scott Scharman.

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, the proposed capital structure and Avid’s historical static pool data. KBRA considered its operational review of Avid, 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, 13 October 2021 00:36