S&P Asgns Rtgs to USAA Auto Owner Trust 2000-1

5 September 2000

S&P Asgns Rtgs to USAA Auto Owner Trust 2000-1

    NEW YORK--Sept. 5, 2000--Standard & Poor's CreditWire--Standard & Poor's assigned its ratings to USAA Auto Owner Trust 2000-1's $483 million fixed-rate automobile loan notes and certificates.
    This is United Services Automobile Association's (USAA) sixth securitization, but its first owner trust structure; the first five securitizations had grantor trust structures.
    Because of the flexibility offered by an owner trust structure, this securitization features class A-1, a money market class rated single-'A-1'-plus, which represents 24.4% of the issuance; classes A-2 to A-4, all rated triple-'A', which represent 71.84%; and class B subordinate certificates rated triple-'B', which represent 3.75 % of this issuance. The credit enhancement is at the same levels as in the grantor trusts, the difference in this securitization being a fully sequential payment structure (versus pro rata in the past deals).
    All classes of notes and certificates benefit from a reserve account that is funded with an initial deposit of 0.75% of the initial pool balance, capping at 1.25% of the current pool balance, with a floor of 0.50% of the initial pool balance. Based on delinquency and net loss triggers, the reserve account will increase to 2.5%, should pool performance deteriorate. The pool's credit enhancement provides a sufficient amount of loss coverage for the assigned ratings. In addition, soft credit support is available through excess spread, which in this securitization has been estimated to be 50 basis (bps) higher than in the 1999-1 securitization. This is primarily due to a reduction in this securitization's servicing fee of 50 bps from 1%, which had been the fee in USAA's prior securitizations. The risk of having a below-industry servicing fee is mitigated by the fact that Chase Manhattan Bank N.A. is the backup servicer, and has agreed to the same fee amount.
    USAA was founded in 1922 and is headquartered in San Antonio, Texas. The company started as a reciprocal reinsurance exchange for armed forces officers, its members, but has since broadened its consumer finance services to commercial banking, various insurance services, credit cards, and brokerage services. USAA Federal Savings Bank , its banking subsidiary, markets its services to its members, their families, and recently, to enlisted military personnel, which they call associates. Its auto loan concentration is highest in Texas (19.36%) and California (9.64%). As of Dec .31, 1999, the bank had total assets of $8.9 billion, and total equity of $806 million.
    USAA Federal Savings Bank (seller and servicer) sells the assets to USAA Auto Owner Trust 2000-1 (issuer). The trust issues class A certificates, which will be sold to investors, as well as class B certificates, which will be sold to a subsidiary of USAA. The composition of the receivables in this pool is consistent with that of previous securitizations: the collateral is made up of new and used automobiles and light-duty trucks, backed by simple interest contracts that do not exceed a tenor of 72 months. The used auto loan content in this pool, at 46.54% (40.67% in 1999-1), is higher than the 23.6% level of the previous deals, but is not deemed to have a significant adverse effect on the pool's loss levels.
    Net losses fell to 0.23% (on an annualized basis, based on results for the period ended June 30, 2000), from 0.27% for fiscal-year 1999. Delinquencies exceeding 30 days decreased from 0.36% at year-end 1999, and are at 0.34% for the six-month period ended June 1999. The increase in delinquencies and net losses is a result of the auto loan portfolio's growth, which targets its expanded customer base. Auto loan portfolio outstandings have grown 23% by year-end 1997, 35% by year-end 1998, 31% by fiscal-year 1999, and at 22% during the six-month period ending June 2000, Standard & Poor's said. - CreditWire

RATINGS ASSIGNED

USAA Auto Owner Trust 2000-1 Issue Rating Class A-1 $118 million, 6.734% notes A-1+ Class A-2 $128 million, 6.90% notes AAA Class A-3 $136 million, 6.95% notes AAA Class A-4 $83.3 million 6.98% notes AAA Class B $18.1 million, 7.72% certificates BBB

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