DBRS Assigns Provisional Ratings to Skopos Auto Receivables Trust 2019-1

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes to be issued by Skopos Auto Receivables Trust 2019-1 (SKOP 2019-1 or the Issuer):

-- $73,190,000 Class A Notes rated AA (sf)
-- $19,010,000 Class B Notes rated A (sf)
-- $25,030,000 Class C Notes rated BBB (sf)
-- $16,480,000 Class D Notes rated BB (sf)
-- $11,090,000 Class E Notes rated B (sf)

The ratings are based on a review by DBRS of the following analytical considerations:

(1) Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization (OC), 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.

(2) 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 final scheduled distribution date.

(3) The capabilities of Skopos Financial, LLC (Skopos) with regard to originations, underwriting and servicing.

(4) DBRS has performed an operational review of Skopos and considers the entity to be an acceptable originator of subprime automobile loan contracts and an acceptable servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- The Skopos senior management team has considerable experience and a successful track record within the subprime auto finance industry.
-- Skopos outsources certain operational functions to CSC Logic, Inc (CSC). DBRS has performed an operational review of CSC and considers the entity to be an acceptable provider of servicing-related processes for subprime automobile loan contracts.

(5) The credit quality of the collateral and the performance of Skopos’ auto loan portfolio.
-- Availability of sufficient historical performance data on the Skopos portfolio.
-- The statistical pool characteristics.
-- The pool is seasoned by approximately 14 months and contains Skopos originations from Q1 2013 through Q4 2019.
-- The weighted-average (WA) remaining term of the collateral pool is approximately 57 months.
-- The WA FICO score of the pool is 545.

(6) Systems and Services Technologies, Inc. (SST) will act as the backup servicer for the transaction.
-- DBRS has performed an operational review of SST and considers the entity to be an acceptable backup servicer of subprime automobile loan contracts.

(7) 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 Skopos, that the trust has a valid first-priority security interest in the assets and the consistency with the DBRS “Legal Criteria for U.S. Structured Finance.”

The Skopos 2019-1 transaction represents the third securitization completed by Skopos and will offer both senior and subordinate rated securities. The receivables securitized in Skopos 2019-1 will be subprime automobile loan contracts secured by new and used automobiles, light-duty trucks, minivans and sport-utility vehicles.

The initial credit enhancement for the Class A Notes will be 54.80% and will include a 1.00% reserve account of the aggregate outstanding principal balance (i.e., sum of the initial pool balance and the balance of the expected prefunded collateral, which is funded at inception and non-declining); 8.60% OC of the aggregate outstanding principal balance; and subordination of 45.20% of the aggregate outstanding principal balance. Initial Class B enhancement of 42.80% includes the 1.00% reserve account, 8.60% OC and 33.20% subordination. Initial Class C enhancement of 27.00% includes the 1.00% reserve account, 8.60% OC and subordination of 17.40%. Initial Class D enhancement of 16.60% includes the 1.00% reserve account, 8.60% OC and subordination of 7.00%. Initial Class E enhancement of 9.60% includes the 1.00% reserve account and 8.60% OC.

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 & Criteria.
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.

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

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