KBRA Assigns Preliminary Ratings to Carvana Auto Receivables Trust 2019-3

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to seven classes of notes issued by Carvana Auto Receivables Trust 2019-3 (“CRVNA 2019-3”), an auto loan ABS Transaction. CRVNA 2019-3 represents the third term ABS securitization for Carvana LLC (Carvana or the “Company”) in 2019.

In 2012, DriveTime Automotive Group Inc. (DriveTime) launched Carvana, an eCommerce platform for buying used vehicles. Carvana’s website (www.Carvana.com) offers a unique used vehicle buying experience that enables customers to purchase vehicles online through an efficient and transparent process. Carvana’s target customer demographic is not specific to credit and is geared to attract a broader credit spectrum and income classification than that of DriveTime. Initially launched in Atlanta, Georgia, Carvana has expanded nationally and is now operating in 141 markets. Carvana’s business and operations fully integrate all steps of the vehicle purchase process. The Company is led by founder and CEO Ernie Garcia III who currently owns approximately 10%. The company completed its IPO in April 2017, and the stock trades on the New York Stock Exchange under the symbol CVNA.

CRVNA 2019-3 trust will issue seven classes of notes rated AAA (sf) though BB (sf) totaling $583.20 million. Class A-1 is rated K1+ (sf), KBRA’s highest short-term credit rating. The transaction is expected to be collateralized by approximately $600 million of automobile loans at closing. The automobile loans are fixed rate installment loans, made to prime and subprime borrowers with a weighted average non-zero FICO score of 635. In addition, the loans have an average current principal balance of $19,084, weighted average interest rate of 13.47%, and weighted average original term and remaining term of 70 and 69 months, respectively. The collateral is 100% used vehicles.

The transaction has initial credit enhancement levels of 48.70% for the Class A Notes, 33.05% for the Class B Notes, 23.40% for the Class C Notes, 11.80% for the Class D Notes and 4.05% for the Class E Notes. Credit enhancement consists of excess spread, overcollateralization, subordination (except for the Class E Notes) and a reserve account funded at closing. Bridgecrest Credit Company (Bridgecrest), is an affiliate of DriveTime and will be the primary servicer of the securitization.

KBRA applied its Global Auto Loan ABS Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Carvana’s historical static pool data as well as publicly available static pool loss data for comparable auto loan originators. 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.

To access ratings, reports and disclosures, click here.

Preliminary Ratings Assigned: Carvana Auto Receivables Trust 2019-3

Class

Preliminary Rating

Initial Principal Balance

A-1

K1+ (sf)

$70,000,000

A-2

AAA (sf)

$130,000,000

A-3

AAA (sf)

$115,300,000

B

AA (sf)

$93,900,000

C

A (sf)

$57,900,000

D

BBB (sf)

$69,600,000

E

BB (sf)

$46,500,000

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

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. KBRA is also 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.

Contacts

Analytical:

Alla Mikhalevsky, CFA, Director

(646) 731-3356

amikhalevsky@kbra.com

Pritam Patel, Associate

(646) 731-3374

ppatel@kbra.com

Eric Neglia, Managing Director

(646) 731-2405

eneglia@kbra.com

Rosemary Kelley, Senior Managing Director

(646) 731-2337

rkelley@kbra.com

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