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KBRA Assigns Preliminary Ratings to Notes Issued by Flagship Credit Auto Trust 2017-3

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Flagship Credit Auto Trust 2017-3 (FCAT 2017-3), an auto loan ABS transaction.

FCAT 2017-3 is collateralized by approximately $185.2 million of subprime auto loan receivables as of July 31, 2017 out of an expected collateral balance of approximately $231.1 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to 20% of the collateral pool to be funded after closing. The prefunding period is two months but the prefunding is expected to be completed by September 30, 2017 based on current origination volume. The preliminary ratings reflect the initial credit enhancement levels of 46.00% for the Class A notes, 31.75% for the Class B notes, 20.25% for the Class C notes, 11.00% for the Class D notes, and 5.50% for the Class E notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves and excess spread. This transaction is Flagship’s third securitization in 2017 and its twentieth securitization overall.

This transaction includes loans originated from both the Flagship Credit Acceptance and CarFinance Capital LLC branded origination channels. On January 1, 2015, Perella Weinberg Partners’ Asset Based Value Strategy closed a merger of its two auto loan platforms, FCA and CarFinance. FCA’s management team, led by Mike Ritter, has combined the FCA and CarFinance operations over the past two years following the merger.

KBRA applied its U.S. Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Flagship’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Flagship Credit Auto Trust 2017-3 Pre-Sale Report, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Flagship Credit Auto Trust 2017-3

ClassRatingExpected Initial Principal Balance
AAAA (sf)$129,410,000
BAA (sf)$32,930,000
CA (sf)$26,570,000
DBBB (sf)$21,380,000
EBB (sf)$12,710,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Flagship Credit Auto Trust 2017-3 Representations and Warranties Disclosure

Related Publications available at www.kbra.com.

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