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KBRA Assigns Preliminary Ratings to Skopos Auto Receivables Trust 2019-1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Skopos Auto Receivables Trust 2019-1 (“SKOP 2019-1”), an auto loan ABS transaction.

Founded in 2012, Skopos Financial, LLC (“Skopos” or the “Company”) is an indirect automobile finance company based in Irving, TX. The Company operates in the deep sub-prime market where many of their borrowers have experienced prior credit difficulties or have limited credit histories. Borrowers typically have credit bureau scores ranging from 475 to 620. The Company forecasts losses on the loans it originates and prices them using their third-generation scorecard. The scorecard incorporates several predictive attributes such as the borrower’s payment to income, loan to value (“LTV”) and depreciation forecasts based on the make and model of the vehicle. The Company proactively targets customers with low LTV’s and those that have made a meaningful down payment.

SKOP 2019-1 will issue five classes of notes totaling $144.8 million (collectively, the “Notes”) with an expected closing date of September 16, 2019. This transaction represents the third rated term ABS securitization for the Skopos. Skopos issued its inaugural, unrated ABS transaction SKOP 2015-1 in April 2015. KBRA rated the Company’s next two securitizations SKOP 2015-2 in October 2015 and SKOP 2018-1 in March 2018. Skopos will use the net proceeds from the issuance of the 2019-1 Notes to pay down existing debt and for general operating purposes.

This transaction is expected to contain approximately $137.4 million of receivables at closing out of an expected collateral balance of $158.4 million after completion of the prefunding period. The prefunding will be approximately $21 million that must comply with certain eligibility criteria. The prefunding period is three months and will end November 30, 2019.

The transaction is a sequential pay structure that has initial credit enhancement levels of 54.80% for the Class A Notes, 42.80% for the Class B Notes, 27.00% for the Class C Notes, 16.60% for the Class D Notes, and 9.60% for the Class E Notes. Credit enhancement consists of excess spread, overcollateralization, subordination (in the case of Class A through Class D Notes) and a reserve account funded at closing.

KBRA applied its Global Auto Loan ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Skopos’s historical gross loss 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.

Preliminary Ratings Assigned: Skopos Auto Receivables Trust 2019-1

Class

Preliminary Rating

Principal Balance

A

AA (sf)

$73,190,000

B

A (sf)

$19,010,000

C

BBB (sf)

$25,030,000

D

BB (sf)

$16,480,000

E

B+ (sf)

$11,090,000

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:

Brendan Carter, Associate Director

(646) 731-3315

bcarter@kbra.com

Michael Pettigrew, Analyst

(646) 731-1208

mpettigrew@kbra.com

Eric Neglia, Managing Director

(646) 731-2456

eneglia@kbra.com

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