S&P Assigns Rtg to Flagship Auto Receivables' Nts
19 June 2000
S&P Assigns Rtg to Flagship Auto Receivables' Nts
NEW YORK - Standard & Poor's today assigned its 'A-1'-plus rating and its triple-'A' rating to Flagship Auto Receivables Owner Trust 2000-A's class A-1 through A-4 notes.The ratings on the notes are based on an irrevocable and unconditional surety bond issued by MBIA Insurance Corp. (MBIA; triple-'A' insurer financial strength rating). The surety bond guarantees payment of timely interest and ultimate principal on the class A notes. Standard & Poor's has determined that the underlying risk assumed by MBIA in covering expected cumulative net losses in the range of 6.75%-7.25% is consistent with an investment-grade rating based on a sound legal structure, a spread account, overcollateralization, and first loss coverage provided by approximately 4% annual excess spread. The initial overcollateralization will be equal to 7% of the initial pool balance and will build to 9% through excess spread. The initial spread account balance will be equal to 3% of the initial pool balance and will amortize down to 5% of the current pool balance. In addition, there is a floor of 2.5%, composed of the greater of 1.5% in the spread account and 2.5% in overcollateralization and the spread account combined. The final scheduled maturity date of the class A-1 notes is June 18, 2001. Cash flow projections with conservative assumptions were used to test coverage of timely interest and repayment of principal by this date. These assumptions include a slow voluntary prepayment speed of 0.50% ABS, zero losses, and high delinquencies.
The originator and servicer of the receivables is Flagship Credit Corp., an indirect wholly owned subsidiary of Copelco Financial Services Group Inc. (CFSG). Flagship was formed in July 1997 when two existing CFSG subsidiaries, Franklin Acceptance Corp. and ProCredit Inc., were merged under one single corporate umbrella. Flagship (including its predecessor companies) has been in business since 1957 and focuses on the nonprime sector of the auto finance market. The company originates loans indirectly through a network of 2,300 new and used auto dealers in 34 states and directly through its newly formed subsidiary, Auto-Refi, which extends preapproved refinancing credit to consumers with existing auto loans. Flagship is also one of several preferred nonprime lenders for Carmax, a used car superstore subsidiary of Circuit City Stores. The company currently originates approximately US$45 million in auto loans monthly. Flagship's outstanding auto portfolio as of March 31, 2000, was approximately US$640 million, up from approximately US$280 million as of March 31, 1999. This represents a growth of about 124% in the portfolio during the one-year period.
Annualized net losses as a percentage of the average principal balance outstanding for the three months ended March 31, 2000, were 2.93%, up from 2.35% for the fiscal year ended Dec. 31, 1999, and 2.0% for the three months ended March 31, 1999. The company has also experienced an increase in delinquencies from the same period last year with 30-plus days delinquencies of 3.76% at March 31, 2000, compared with 30-plus days delinquencies of 2.05% at March 31, 1999. Standard & Poor's expects that the performance will remain stable in the near to medium term as efforts are maintained to improve the credit quality of the loans originated.
The receivables balance for the 2000-A pool at the cut-off date is US$232,836,511. The pool consists of approximately 22% new vehicles, has a weighted average APR of 14.62%, and a weighted average FICO score of 646. The receivables have a weighted average original term of 62.67 and a weighted average remaining term of 58.76 months. The largest state concentrations by principal balance are North Carolina (16.79%), Texas (15.08%), Maryland (10.74%), and Georgia (10.02%). These characteristics are consistent with the 1999-1 receivables pool, Standard & Poor's said. -- CreditWire
RATINGS ASSIGNED Issue Rating Flagship Auto Receivables Owner Trust 2000-A Class A-1 $50,991,000 6.92774% asset-backed notes A-1+ Class A-2 $44,937,000 7.44% asset-backed notes AAA Class A-3 $67,057,000 7.58% asset-backed notes AAA Class A-4 $53,553,000 7.69% asset-backed notes AAA