DBRS Finalizes Provisional Ratings on United Auto Credit Securitization Trust 2018-1

DBRS, Inc. (DBRS) finalized its provisional ratings on the following classes of notes issued by United Auto Credit Securitization Trust 2018-1 (UACST 2018-1):

-- $78,840,000 Class A Notes rated AAA (sf)
-- $21,470,000 Class B Notes rated AA (sf)
-- $21,470,000 Class C Notes rated A (sf)
-- $24,740,000 Class D Notes rated BBB (sf)
-- $19,140,000 Class E Notes rated BB (sf)
-- $6,070,000 Class F Notes rated B (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 account and excess spread. Credit enhancement levels are sufficient to support DBRS-projected expected cumulative net loss assumptions 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 principal by the legal final maturity date.
-- United Auto Credit Corporation’s (UACC) capabilities with regard to originations, underwriting and servicing, and the existence of an experienced and capable backup servicer.
-- DBRS has performed an operational risk review of UACC and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- The UACC senior management team has considerable experience and a successful track record within the auto finance industry.
-- UACC successfully consolidated its business into a centralized servicing platform and has consolidated originations into two regional buying centers. UACC retained experienced managers and staff at the servicing center and buying centers.
-- UACC continues to evaluate and fine-tune its underwriting standards as necessary. UACC has a risk management system allowing centralized oversight of all underwriting and substantial technology systems, which provide daily metrics on all originations, servicing and collections of loans.
-- The credit quality of the collateral and performance of UACC’s auto loan portfolio.
-- UACC originates collateral that generally has shorter terms, higher down payments, lower book values and higher borrower income requirements than some other subprime auto loan originators.
-- UACST 2018-1 provides for Class F Notes with an assigned rating of B (sf). While the DBRS “Rating U.S. Retail Auto Loan Securitizations” methodology does not set forth a range of multiples for this asset class at the B (sf) level, the analytical approach for this rating level is consistent with that contemplated by the methodology. The typical range of multiples applied in the DBRS stress analysis for a B (sf) rating is 1.00 to 1.25.
-- 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 UACC and that the trust has a valid first-priority security interest in the assets and consistency with the DBRS “Legal Criteria for U.S. Structured Finance.”

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 for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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

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