NEW YORK--(EON: Enhanced Online News)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by GLS Auto Receivables Trust 2018-1 (“GCAR 2018-1”), an auto loan ABS transaction.
GLS Auto Receivables Trust 2018-1 (“GCAR 2018-1” or “the Issuer”) will issue three classes of notes totaling $266.45 million that are collateralized by a pool of fixed rate retail automobile contracts, made to subprime obligors, secured by new and used non-commercial automobiles. The preliminary ratings reflect the initial credit enhancement levels ranging from 31.50% for the Class A notes to 11.50% for the Class C notes, which build to 39.50% and 19.50% for the Class A and Class C notes, respectively, over time. Credit enhancement is comprised of overcollateralization, subordination of junior note classes, a cash reserve account and excess spread.
This transaction represents Global Lending Services LLC’s (“GLS” or the “Company”) first term ABS securitization of 2018 and fifth overall. GLS’s inaugural securitization was a private, unrated term securitization that closed in 2014. It issued its second securitization in 2015, its third securitization in 2016, and its fourth securitization in 2017 and those were rated by KBRA. GLS is a subprime auto finance company that was founded in October 2011 and is backed by its founder Doug Duncan and BlueMountain Capital Management. GLS benefits from a capable management team that has extensive experience in the auto finance industry.
KBRA applied its Global Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and GLS’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
For complete details on the analysis, please see KBRA’s pre-sale report, GLS Auto Receivables Trust 2018-1 Pre-Sale Report, published January 25, 2018.
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Preliminary Ratings Assigned: GLS Auto Receivables Trust 2018-1 |
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| Class | Preliminary Rating | Initial Principal Balance | ||||
| A | A (sf) | $206,910,000 | ||||
| B | BBB (sf) | $34,980,000 | ||||
| C | BB (sf) | $24,560,000 | ||||
Representations & Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available here.
Related Publications: (available at www.kbra.com)
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
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