First Investors Auto Owner Trust 2019-2 Notes Rated
OVERVIEW
- First Investors Auto Owner Trust 2019-2's issuance is an ABS transaction backed by subprime auto loan receivables.
- We assigned ratings to the class A, B, C, D, E, and F notes.
- The ratings reflect our view of the transaction's credit support, collateral characteristics, and payment structure, among other factors.
NEW YORK (S&P Global Ratings) Oct. 24, 2019--S&P Global Ratings today assigned its ratings to First Investors Auto Owner Trust 2019-2's (FIAOT 2019-2's) asset-backed notes (see list). The note issuance is an ABS transaction backed by subprime auto loan receivables. The ratings reflect:
- The availability of approximately 39.3%, 33.9%, 26.4%, 20.7%, 16.8%, and 13.6% credit support for the class A, B, C, D, E, and F notes, respectively, based on stressed cash flow scenarios (including excess spread). These credit support levels provide approximately 3.50x, 3.00x, 2.30x, 1.75x, 1.40x, and 1.10x coverage of our 10.75%-11.25% expected cumulative net loss range for the class A, B, C, D, E, and F notes, respectively.
- The timely interest and principal payments made under stressed cash flow modeling scenarios that are appropriate for the ratings.
- Our expectation that under a moderate ('BBB') stress scenario, all else being equal, the ratings on the class A, B, and C notes would not drop by more than one rating category, and the ratings on the class D notes would not drop by more than two rating categories. The class E and F notes (rated 'BB- (sf)' and 'B (sf)', respectively) will remain within two rating categories of the assigned ratings during the first year, but will eventually default under the 'BBB' stress scenario. These potential rating movements are consistent with our rating stability criteria (see " Methodology: Credit Stability Criteria," published May 3, 2010).
- The collateral characteristics of the pool being securitized, with direct loans accounting for approximately 43% of the statistical pool. These loans historically have lower losses than the indirect-originated loans.
- Prefunding will be used in this transaction in the amount of approximately $35 million--about 16% of the pool. The subsequent receivables are expected to be transferred into the trust within three months of the closing date.
- First Investors Financial Services Inc.'s (First Investors) 30-year history of originating and underwriting auto loans, 18-year history of self-servicing auto loans, and track record of securitizing auto loans since 2000.
- First Investors' 14 years of origination static pool data, segmented by direct and indirect loans.
- Wells Fargo Bank N.A.'s experience as the committed back-up servicer.
- The transaction's sequential payment structure, which builds credit enhancement based on a percentage of receivables as the pool amortizes.
RELATED CRITERIA
- Criteria | Structured Finance | Legal: U.S. Structured Finance Asset Isolation And Special-Purpose Entity Criteria, May 15, 2019
- Criteria | Structured Finance | General: Incorporating Sovereign Risk In Rating Structured Finance Securities: Methodology And Assumptions, Jan. 30, 2019
- Criteria | Structured Finance | General: Methodology: Criteria For Global Structured Finance Transactions Subject To A Change In Payment Priorities Or Sale Of Collateral Upon A Nonmonetary EOD, March 2, 2015
- Criteria - Structured Finance - General: Criteria Methodology Applied To Fees, Expenses, And Indemnifications, July 12, 2012
- General Criteria: Global Investment Criteria For Temporary Investments In Transaction Accounts, May 31, 2012
- Criteria | Structured Finance | ABS: General Methodology And Assumptions For Rating U.S. Auto Loan Securitizations, Jan. 11, 2011
- Criteria | Structured Finance | General: Methodology For Servicer Risk Assessment, May 28, 2009
RELATED RESEARCH
- Presale: First Investors Auto Owner Trust 2019-2, Oct. 10, 2019
- Twenty-Four Ratings Raised And 12 Ratings Affirmed On Eight First Investors Auto Owner Trust Deals, Sept. 27, 2019
- Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors, Dec. 16, 2016
In addition to the criteria specific to this type of security (listed above), the following criteria articles, which are generally applicable to all ratings, may have affected this rating action: "Counterparty Risk Framework: Methodology And Assumptions," March 8, 2019; "Post-Default Ratings Methodology: When Does Standard & Poor's Raise A Rating From 'D' Or 'SD'?," March 23, 2015; "Global Framework For Assessing Operational Risk In Structured Finance Transactions," Oct. 9, 2014; "Methodology: Timeliness of Payments: Grace Periods, Guarantees, And Use of 'D' And 'SD' Ratings," Oct. 24, 2013; " Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," Oct. 1, 2012; "Methodology: Credit Stability Criteria," May 3, 2010; and "Use of CreditWatch And Outlooks," Sept. 14, 2009. RATINGS ASSIGNED First Investors Auto Owner Trust 2019-2 Class Rating Amount (mil. $) Coupon (%) A AAA (sf) 150.890 2.21 B AA (sf) 15.640 2.47 C A (sf) 20.360 2.71 D BBB (sf) 14.360 2.80 E BB- (sf) 7.400 3.88 F B (sf) 5.670 5.69
Primary Credit Analyst: | Kenneth D Martens, New York (1) 212-438-7327; kenneth.martens@spglobal.com |
Secondary Contact: | Ethan Choi, New York (1) 212-438-1043; ethan.choi@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com.