DBRS Finalizes Provisional Ratings on DT Auto Owner Trust 2017-4

DBRS, Inc. (DBRS) finalized its provisional ratings on the following classes of notes issued by DT Auto Owner Trust 2017-4 (DTAOT 2017-4 or the Issuer):

-- $239,970,000 Series 2017-4 Notes, Class A at AAA (sf)
-- $44,110,000 Series 2017-4 Notes, Class B at AA (sf)
-- $100,570,000 Series 2017-4 Notes, Class C at A (sf)
-- $102,340,000 Series 2017-4 Notes, Class D at BBB (sf)
-- $77,640,000 Series 2017-4 Notes, Class E at 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.
-- DTAOT 2017-4 provides for Class A, B, C, D and E coverage multiples slightly below the DBRS range of multiples set forth in the criteria for this asset class. DBRS believes that this is warranted given the magnitude of expected loss and structural features of the transaction.
-- The transaction parties’ capabilities with regard to originations, underwriting and servicing.
-- The portfolio of DriveTime Automotive Group, Inc. (DriveTime) has exposure to the areas of Texas, Florida and Louisiana, which were affected by Hurricanes Harvey and Irma. To limit the risk to the transaction, DriveTime excluded loans that had a billing address within a zip code subject to a disaster declaration by the Federal Emergency Management Agency and had not yet made a full monthly or monthly equivalent payment.
-- The quality and consistency of the provided historical static pool data for DriveTime originations and the performance of the DriveTime auto loan portfolio.
-- The November 19, 2014, settlement of the Consumer Financial Protection Bureau inquiry relating to allegedly unfair trade practices.
-- 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 DriveTime, 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.”

The DTAOT 2017-4 transaction represents a securitization of a portfolio of motor vehicle retail installment sales contracts originated by DriveTime Car Sales Company, LLC (the Originator). The Originator is a direct, wholly owned subsidiary of DriveTime. DriveTime is a leading used vehicle retailer in the United States that focuses on the sale and financing of vehicles to the subprime market.

The rating on the Class A notes reflects the 67.50% of initial hard credit enhancement provided by the subordinated notes in the pool, the Reserve Account (1.50%) and overcollateralization (20.00%). The ratings on the Class B, C, D and E notes reflect 61.25%, 47.00%, 32.50% and 21.50% of initial hard credit enhancement, respectively. Additional credit support may be provided from excess spread available in the structure.

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

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 internal documents of the rated entity or its related entities.

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