AmeriCredit Auto Receivable Trust 1997-D Rated by S&P
24 November 1997
AmeriCredit Auto Receivable Trust 1997-D Rated by S&P
NEW YORK, Nov. 24 -- Standard & Poor's today assigned its
triple-'A' ratings to AmeriCredit Automobile Receivables Trust 1997-D $182.0
million class A-2 floating rate notes and the company's $123.0 million class
A-3 6.24% notes based on the insurance policies provided by Financial Security
Assurance Inc. (FSA) (triple-'A' claims-paying ability rating). Under these
policies FSA unconditionally and irrevocably guarantees payment of scheduled
principal and interest.
At the same time, Standard & Poor's assigned its 'A-1'-plus rating to the
trust's $95.0 million class A-1 5.80% notes. While these notes are FSA
insured, this rating is not based on the policy, but rather internal credit
support and conservative cash flow projections.
Standard & Poor's has determined that the underlying transaction risk
assumed by FSA is consistent with an investment-grade rating based on a sound
legal structure and internal credit support. First loss credit coverage
consists of a cash reserve, overcollateralization of 10% that will be obtained
by using excess spread and 100% of principal collections to retire the notes
sequentially beginning with the A-1 notes, and additional ongoing monthly
excess spread.
The class A-1 notes have a legal final maturity of 13 months and benefit
from 100% of principal collections and excess spread until retired. Standard &
Poor's utilized conservative cash flow assumptions to test cash flow coverage
of timely interest and repayment of principal by the final maturity without
drawing on FSA's insurance policy. These assumptions included a slow absolute
prepayment speed (ABS) of .5%; zero losses, high delinquencies, and the
purchase of subsequent receivables on the last day of the funding period (Jan.
31, 1998).
The originator and servicer of the receivables is AmeriCredit Financial
Services, Inc. (AmeriCredit), a wholly-owned subsidiary of AmeriCredit Corp.
AmeriCredit purchases indirect sub-prime auto receivable contracts from
manufacturer-franchised dealers and independent used car dealers. Its mix of
business has steadily moved toward franchised dealers as they represented 84%
of the origination volume for the three months ended Sept. 30, 1997 up from
77% for the year ended June 30, 1996 and 68% in the prior year. AmeriCredit
underwrites receivables through its 99 branch offices and collects and
services them in its three centralized collection centers in Fort Worth,
Texas; Tempe, Ariz.; and Charlotte, N.C.
Despite continued rapid growth in its portfolio during the last 12
months, AmeriCredit has managed delinquencies to a consistent level and losses
appear to have stabilized. AmeriCredit's portfolio grew approximately 116% to
$1.4 billion at Sept. 30, 1997 from $642 million at Sept. 30, 1996.
Delinquencies (including unsold repossessions) rose slightly to 11.6% at Sept.
30, 1997 compared to 11.2% a year earlier. Annualized net losses were 5.5% for
the quarter ended Sept. 30, 1997, unchanged from both the previous quarter
ended June 30, 1997 and the quarter ended Sept. 30, 1996.
The 1997-D receivables pool is composed of $325 million in sub-prime
retail installment sales contracts and $75 million (19% of total transaction
size) in the pre-funding account that will be used to originate receivables
over the next two months. The weighted average annual percentage rate is
19.27%. The largest state concentrations remain Texas (10%) and Calif. (15%),
and the weighted average original maturity and seasoning are 57 months and 1
month, respectively. The percentage of new cars (21%) is a little higher than
previous AmeriCredit's deals and continues to be consistent with the company's
strategy to focus more on franchised dealers and less on independent dealers
that sell only used cars.
Standard & Poor's expects the 1997-D pool to experience between 9% and
11% in cumulative net losses. Internal credit enhancement in the form of a
spread account, 10% overcollateralization, additional monthly excess spread,
and stressed cash flows provide adequate liquidity and credit coverage for the
standalone 'A-1'-plus rating on the 'A-1' notes, which have a legal final
maturity of 13 months. Internal credit support for 'A-2' and 'A-3', which
mature sequentially from July 5, 2001 to Sept. 5, 2003, provides FSA with a
multiple of expected losses that is consistent with an investment grade
rating.
This is AmeriCredit's eleventh securitization, and its seventh public
one. The prior transactions were also insured by FSA and rated by Standard &
Poor's. -- CreditWire
SOURCE Standard & Poor's CreditWire