CPS Announces First Rated Securitization Since 2008
September 27 2010 - 1:49PM
Consumer Portfolio Services, Inc. (Nasdaq:CPSS) ("CPS" or the
"Company") today announced the closing of its first rated term
securitization in over two years. The transaction is CPS's first
senior subordinate securitization since 1993.
In the transaction, qualified institutional buyers purchased
$85,352,000 of investment grade notes backed by automobile
receivables purchased by CPS and its subsidiary, The Finance
Company, primarily in 2008. These receivables were originally
financed in September 2008 through CPS's non-consolidated
subsidiary, Auto Loan Trust, in which an institutional investor
purchased 95% of the issued notes and the Company retained the
remaining 5%. Auto Loan Trust was terminated with this
transaction.
The sold notes, issued by CPS Auto Receivables Trust 2010-A,
consist of two classes. Ratings of the notes were provided by
Standard & Poor's and were based on the structure of the
transaction, the historical performance of similar receivables and
CPS's experience as a servicer.
Note Class |
Amount |
Interest Rate |
Average Life |
Price |
Standard & Poor's Rating |
A |
$77.050 million |
2.89% |
1.03 years |
99.99366% |
A |
B |
$8.302 million |
5.68% |
1.25 years |
99.99752% |
BBB |
The weighted average effective coupon on the notes is
approximately 3.21%.
The 2010-A transaction has initial credit enhancement consisting
of a cash deposit equal to 1.00% of the original receivable pool
balance, subordinated interests of 5.00% and overcollateralization
of 12.75%. The final enhancement level requires accelerated payment
of principal on the notes to reach overcollateralization of 23.00%
of the then-outstanding receivable pool balance.
"This transaction is a significant milestone for us because it
demonstrates our ability to access today's securitization market,"
said Charles E. Bradley, Jr., Chairman and Chief Executive
Officer. "A lower cost of funds going forward, together with
continued growth in our new contract purchases, should pave our way
back to profitability."
The transaction was a private offering of securities, not
registered under the Securities Act of 1933, or any state
securities law. All of such securities having been sold, this
announcement of their sale appears as a matter of record only.
About Consumer Portfolio Services, Inc.
Consumer Portfolio Services, Inc. is an independent specialty
finance company that provides indirect automobile financing to
individuals with past credit problems, low incomes or limited
credit histories. We purchase retail installment sales contracts
primarily from franchised automobile dealerships secured by late
model used vehicles and, to a lesser extent, new vehicles. We fund
these contract purchases on a long-term basis primarily through the
securitization markets and service the contracts over their
lives.
Forward Looking Statements
This news release contains forward looking statements, which
include the statements that the transaction should allow us to
decrease our cost of funds in the future and thus, with assumed
growth in new contract purchases, to become profitable
again. There can be no assurance that we will be able to
reduce our cost of funds, increase contract purchases, or attain
such profitability. Our ability to attain these objectives
will be dependent on factors that include (i) the willingness and
ability of our competitors to purchase similar contracts from
dealers, (ii) the terms and conditions on which such competitors
purchase such contracts, (iii) our ability to fund our portion of
the purchase price of such automobile finance contracts, which in
turn may depend on the availability and cost of capital to us, (iv)
the terms on which we may be able to execute future securitization
transactions and (v) the overall level of automobile purchases in
the United States.
CONTACT: Consumer Portfolio Services, Inc.
Investor Relations Contact
Robert E. Riedl, Chief Investment Officer
949 753-6800
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