DBRS Assigns Provisional Ratings to CPS Auto Receivables Trust 2016-B

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes issued by CPS Auto Receivables Trust 2016-B:

-- Series 2016-B, Class A rated AAA (sf)
-- Series 2016-B, Class B rated AA (high) (sf)
-- Series 2016-B, Class C rated A (low) (sf)
-- Series 2016-B, Class D rated BBB (low) (sf)
-- Series 2016-B, Class E rated BB (low) (sf)

The ratings are based on a review by DBRS of the following analytical considerations:
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization, subordination, amounts held in the reserve fund and excess spread. Credit enhancement levels are sufficient to support the DBRS-projected expected cumulative net loss assumption under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the rating addresses the payment of timely interest on a monthly basis and the payment of principal by the legal final maturity date.
-- The capabilities of Consumer Portfolio Services, Inc. (CPS) with regard to originations, underwriting and servicing.
-- DBRS has performed an operational review of CPS and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- The CPS senior management team has considerable experience and a successful track record within the auto finance industry, having managed the company through multiple economic cycles.
-- The quality and consistency of provided historical static pool data for CPS originations and performance of the CPS auto loan portfolio.
-- The May 29, 2014, settlement of the Federal Trade Commission (FTC) inquiry relating to allegedly unfair trade practices.
-- CPS paid imposed penalties and restitution payments to consumers.
-- CPS has made considerable improvements to the collections process, including management changes, upgraded systems and software as well as implementation of new policies and procedures focused on maintaining compliance.
-- CPS will be subject to ongoing monitoring of certain processes by the FTC.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with CPS, that the trust has a valid first-priority security interest in the assets and the consistency with DBRS’s “Legal Criteria for U.S. Structured Finance” methodology.

Notes:
The applicable methodology is Rating U.S. Retail Auto Loan Securitizations, which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link or by contacting us at info@dbrs.com.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.