December 4, 2022

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Flagship adds called collateral to fourth subprime auto ABS deal of 2020

Flagship Credit Acceptance is marketing its fourth subprime auto-loan securitization of the year, with a collateral pool that will have a high share of called collateral as well assets to be determined during a post-closing prefunding period.

According to ratings agency presale reports, Flagship will sell $303 million in bonds from a $314.8 million of loan originations by Flagship as well as its CarFinance.com subsidiary.

Approximately 14{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} of the loans in the identified pool are called collateral from a 2015 securitization by Flagship (the latest deal is Flagship’s 22ndterm asset-backed offering). In addition, the deal includes a $62.96 million prefunding account in which Flagship will originate and sell loans into the pool after the ABS deal prices.

The transaction includes a $203.2 million Class A tranche due April 2025 with preliminary AAA ratings from S&P Global Ratings and DBRS Morningstar.

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S&P considers the deal slightly stronger from a credit quality perspective compared to Flagship’s most recent transaction (FCAT 2020-3). The weighted average loan-to-value ratio decreased to 120.4{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} from 123.3{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}, and increased seasoning to eight months from two months due to the inclusion of the older called collateral

The identified portfolio has 11,496 receivables from within Flagship’s $3.13 billion managed portfolio.

Over 78{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} of the loans are for used vehicles, with WA original terms of 70.07 months.

S&P’s expected loss range is 13.25{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}-13.75{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}.

Wells Fargo is the lead on the deal.