Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes issued by GLS Auto Receivables Issuer Trust 2018-3 (GCAR 2018-3), an auto loan ABS transaction.
GLS Auto Receivables Issuer Trust 2018-3 (GCAR 2018-3 or the Issuer) issued four classes of notes totaling $288.22 million. The notes are backed by a pledge of assets of the Issuer and the underlying trust, the assets will include a certificate representing the entire beneficial ownership in the underlying trust. The assets of the underlying trust will include a pool of fixed rate retail automobile contracts, made to subprime obligors, who generally have a credit bureau score ranging from 470 to 620, secured by new and used non-commercial automobiles.
The final ratings reflect the initial credit enhancement levels ranging from 46.45% for the Class A notes to 9.50% for the Class D notes, which build to 57.95% and 21.00% for the Class A and Class D 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 LLCs (GLS or the Company) third term ABS securitization of 2018 and seventh overall. GLSs inaugural securitization was a private, unrated term securitization that closed in 2014. 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 transactions underlying collateral pool, the proposed capital structure and GLSs historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transactions legal structure and transaction documents. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.
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For complete details on the analysis, please see KBRAs new issue report, GLS Auto Receivables Issuer Trust 2018-3 Pre-Sale Report, published September 27, 2018.
Preliminary Ratings Assigned: Preliminary Auto Receivables Issuer Trust 2018-3
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Representations & Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transactions representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRAs 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 designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is 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.