Morningstar DBRS Assigns Provisional Credit Ratings to GLS Auto Receivables Issuer Trust 2025-1

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the classes of notes to be issued by GLS Auto Receivables Issuer Trust 2025-1 (the Issuer) as follows:

-- $85,000,000 Class A-1 Notes at (P) R-1 (high) (sf)
-- $160,710,000 Class A-2 Notes at (P) AAA (sf)
-- $83,670,000 Class A-3 Notes at (P) AAA (sf)
-- $101,330,000 Class B Notes at (P) AA (sf)
-- $94,960,000 Class C Notes at (P) A (sf)
-- $93,910,000 Class D Notes at (P) BBB (low) (sf)
-- $46,960,000 Class E Notes at (P) BB (sf)

The provisional credit ratings are based on Morningstar DBRS' review of the following analytical considerations:

(1) Transaction capital structure, proposed credit 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 Morningstar DBRS-projected expected cumulative net loss (CNL) 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 credit ratings address the payment of timely interest on a monthly basis and the payment of principal by the legal final maturity date.

(3) The quality and consistency of provided historical static pool data for Global Lending Services LLC (GLS or the Company) originations and performance of the GLS auto loan portfolio.

(4) The credit quality of the collateral and performance of GLS' auto loan portfolio, as of the Statistical Calculation Date:
-- The pool will include approximately 85.7% used and 14.3% new vehicles, 85.1% of which are from franchise dealers.
-- The loans in the pool will have a weighted-average FICO of 580 and a weighted-average annual percentage rate of 20.88%.

(5) The Morningstar DBRS CNL assumption is 18.90% based on the Cutoff Date pool composition.

(6) The capabilities of GLS with regard to originations, underwriting, and servicing.
-- Morningstar DBRS has performed an operational review of GLS and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts. The transaction also has an acceptable backup servicer.

(7) The consistent operational history of GLS and the overall strength of the Company and its management team.
-- The GLS senior management team has considerable experience within the auto finance industry, with most of the executives having been with the Company for most of its 13-year history.

(8) Morningstar DBRS used the static pool approach exclusively because GLS has enough data to generate a sufficient amount of static pool projected losses.
-- Morningstar DBRS was conservative in the loss forecast analysis performed on the static pool data.

(9) The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary "Baseline Macroeconomic Scenarios for Rated Sovereigns December 2024 Update," published on December 19, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.

(10) The legal structure and presence of legal opinions that are expected to address the true sale of the assets to the Issuer, the nonconsolidation of the special-purpose vehicle with GLS, that the trust has a valid first-priority security interest in the assets, and the consistency with the Morningstar DBRS "Legal Criteria for U.S. Structured Finance."

GLS is an independent full-service automotive financing and servicing company that provides (1) financing to borrowers who do not typically have access to prime credit-lending terms for the purchase of late-model vehicles and (2) refinancing of existing automotive financing.

The credit ratings on the Class A-1, Class A-2, and Class A-3 Notes reflect 54.35% of initial hard credit enhancement provided by the subordinated notes in the pool (47.75%), the reserve account (1.00%), and OC (5.60%). The credit ratings on the Class B, C, D, and E Notes reflect 40.00%, 26.55%, 13.25%, and 6.60% of initial hard credit enhancement, respectively. Additional credit support may be provided from excess spread available in the structure.

Morningstar DBRS' credit ratings on the securities referenced herein address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for each of the rated notes are the related Noteholders' Monthly Interest Distributable Amount and the related Principal Amount.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction documents that are not financial obligations. The associated contractual payment obligation that is not a financial obligation for each of the rated notes is the related interest on any unpaid Noteholders' Monthly Interest Distributable Amount.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Notes:
All figures are in US dollars unless otherwise noted.

The principal methodology applicable to the credit ratings is Rating U.S. Retail Auto Loan Securitizations (August 06, 2024) https://dbrs.morningstar.com/research/437569.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

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

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- Rating U.S. Structured Finance Transactions (November 18, 2024) https://dbrs.morningstar.com/research/443136

-- Operational Risk Assessment for U.S. ABS Originators and Servicers (December 05, 2024) https://dbrs.morningstar.com/research/444162

-- Legal Criteria for U.S. Structured Finance (December 03, 2024) https://dbrs.morningstar.com/research/444064

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