Fitch IBCA Expects to Rate Chevy Chase Auto $151 Million ABS - Fitch Financial Wire -
16 March 1998
Fitch IBCA Expects to Rate Chevy Chase Auto $151 Million ABS - Fitch Financial Wire -
NEW YORK, March 16 -- Chevy Chase Auto Receivables Trust
1998-1's $150,969,898 5.97% auto receivables backed certificates are expected
to be rated 'AAA' by Fitch IBCA. The expected rating on the certificates
reflects the quality of the prime and subprime automobile loan assets, the
availability of excess spread to cover losses and fund the reserve account and
the ability of MBIA Insurance Corp. (MBIA) to make payments under the
certificate insurance policy.
Structurally, the 1998-1 transaction will be similar to that of the 1997-2
transaction, differentiating itself only with an increase in credit
enhancement. The increase in credit enhancement is to offset a higher
percentage of subprime contracts in the receivables pool. Further credit
protection is afforded through three month average delinquency and net loss
triggers, as well as the introduction of a cumulative loss trigger not seen in
the 1997-2 transaction, which will cause additional excess cash to be trapped
and diverted to the reserve account should they be breached.
Of the aggregate principal balance of the receivables, as of the cut off
date, 32.93%, representing prime auto loans, were originated or purchased by
Chevy Chase Bank, F.S.B., while the remaining 67.07%, representing subprime
auto loans, were originated by Consumer Finance Corp. (CFC), a wholly owned
subsidiary of Chevy Chase Bank. Fitch IBCA has reviewed the operations of
Chevy Chase Bank and CFC and believes management has the ability to manage
losses at a level consistent with the rating.
The receivables in the pool have a weighted average original maturity of
58.09 months, a weighted average remaining term of 56.09 months and a weighted
average contract rate of 16.54%. The receivables originated by Chevy Chase
Bank or purchased through their dealer network represent financing for new
vehicles (39.72%) and used vehicles (60.28%). All the CFC receivables were
purchased through dealers and represent financing for new vehicles (16.89%)
and used vehicles (83.11%). The obligors are located primarily in Virginia
(28.59%), Georgia (13.83%), Maryland (13.10%) and North Carolina (19.65%).
Other states representing more than 5.0% of the receivables pool are Florida
(5.87%), Ohio (5.99%) and Pennsylvania (6.12%).
Principal and interest are payable on the 20th of each month, beginning
April 20, 1998. Credit enhancement for the certificates will consist of the
reserve account, excess spread and the certificate insurance policy provided
by MBIA. If the required payments on the certificates for a distribution date
are in excess of the funds collected on the contracts, and any amount
available in the reserve account, MBIA will cover such shortfall. Fitch IBCA
rates the claims paying ability of MBIA Insurance Corp., the principal
operating subsidiary of MBIA Inc., 'AAA.'
SOURCE Fitch IBCA, Inc.