DBRS Finalizes Provisional Ratings of Prestige Auto Receivables Trust 2017-1

DBRS, Inc. (DBRS) finalized the provisional ratings of the following classes issued by Prestige Auto Receivables Trust 2017-1:

-- $45,700,000 Series 2017-1, Class A-1 rated R-1 (high) (sf)
-- $117,000,000 Series 2017-1, Class A-2 rated AAA (sf)
-- $50,260,000 Series 2017-1, Class A-3 rated AAA (sf)
-- $35,850,000 Series 2017-1, Class B rated AA (sf)
-- $44,100,000 Series 2017-1, Class C rated A (sf)
-- $31,020,000 Series 2017-1, Class D rated BBB (sf)
-- $11,293,000 Series 2017-1, Class E rated BB (sf)

The ratings are based on DBRS’s review 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 ratings address the payment of timely interest on a monthly basis and the payment of principal by the legal final maturity date.
-- The transaction parties’ capabilities with regard to originations, underwriting and servicing.
-- DBRS has performed an operational review of Prestige Financial Services, Inc. (Prestige) and considers the entity to be an acceptable originator and servicer of subprime automobile loan receivables with an acceptable backup servicer.
-- The Prestige management team has extensive experience. They have been lending to the subprime auto sector since 1994 and have considerable experience lending to Chapter 7 and 13 obligors.
-- The credit quality of the collateral and performance of Prestige’s auto loan portfolio.
-- 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 consistency with DBRS’s “Legal Criteria for U.S. Structured Finance” methodology.

This is the 16th transaction Prestige has issued in the asset-backed securities (ABS) term market. All of the term ABS transactions issued between 2001 and 2007 were wrapped by a monoline insurer while all of the term ABS transactions issued since 2009 were senior-subordinate transactions. All of the transactions, except for the PART 2014-1, 2015-1, 2016-1 and 2016-2 term securitizations, which remain outstanding, have paid off in full without experiencing an Event of Default.

Initial Class A credit enhancement of 41.60% includes a reserve account (1.00% of the initial aggregate principal balance, funded at inception and non-declining), overcollateralization (OC) of 6.50% of the initial pool balance and subordination of 34.10%. Initial Class B credit enhancement of 31.60% includes the 1.00% reserve account, OC of 6.50% and subordination of 24.10%. Initial Class C credit enhancement of 19.30% includes the 1.00% reserve account, OC of 6.50% and subordination of 11.80%. Initial Class D credit enhancement of 10.65% includes the 1.00% reserve account, OC of 6.50% and subordination of 3.15%. Initial Class E credit enhancement of 7.50% is from the reserve account of 1.00% and OC of 6.50%.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The principal methodology is Rating U.S. Retail Auto Loan Securitizations, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant documents of the rated entity or its related entities.

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

The full report providing analytical detail is available by clicking in the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.

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