KBRA Assigns Ratings to LAD Auto Receivables Trust 2024-2
20 Jun 2024 | New York
KBRA assigns ratings to four classes of notes (seven tranches) issued by LAD Auto Receivables Trust 2024-2 ("LADAR 2024-2"), an auto loan ABS transaction.
LADAR 2024-2 represents the eighth overall ABS securitization for Driveway Finance Corporation ("DFC" or the "Company"), and the second of 2024. LADAR 2024-2 issued four classes of notes (seven tranches) totaling $409.58 million. Credit enhancement on the notes is comprised of overcollateralization (”OC”), yield supplement overcollateralization (“YSOC”), subordination of junior note classes, a cash reserve account, and excess spread.
DFC was incorporated in Oregon in September 2012 under the name Southern Cascades Finance Corporation and rebranded as DFC on January 1, 2021. DFC is a wholly owned subsidiary of Lithia Financial Corporation, itself a wholly owned subsidiary of Lithia Motors, Inc. (“Lithia”). DFC has been originating and servicing loans in the automobile finance business since September 2012, initially targeting a subprime borrower base. Since May 2020, the Company has been a full credit spectrum lender, financing vehicles exclusively to Lithia customers through Lithia’s dealership network and e-commerce business channels. Lithia was founded as a single automotive dealership in 1946 in Ashland Oregon, became incorporated in 1968, and completed an initial public offering on the New York Stock Exchange in 1996, trading under the ticker “LAD.” Today, Lithia is a Fortune 500 company operating 482 dealership locations representing 51 brands in the United States, Canadian provinces, and the United Kingdom. Lithia offers an array of products and services including new and used vehicles, insurance, automotive repair and maintenance, and automobile financing through its DFC subsidiary.
KBRA applied its Auto Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the static pool data and the underlying collateral pool and stressed the capital structure based upon its stress case cash flow assumptions. KBRA considered its operational review of Lithia and DFC, as well as several business updates with the Company since that time. Operative agreements and legal opinions were reviewed prior to closing.
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