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5. Securitization Trust Debt

12 Months Ended

Dec. 31, 2017

(5) Securitization Trust Debt

We have completed numerous term securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Consolidated Balance Sheets as “Securitization trust debt,” and the components of such debt are summarized in the following table:

Series	Final Scheduled Payment Date (1)	Receivables Pledged at December 31, 2017 (2)		Initial Principal		Outstanding Principal at December 31, 2017		Outstanding Principal at December 31, 2016		Weighted Average Interest Rate at December 31, 2017
		(Dollars in thousands)
CPS 2012-C	December 2019		–		147,000		–		14,421		–
CPS 2012-D	March 2020		–		160,000		–		17,865		–
CPS 2013-A	June 2020		–		185,000		–		28,661		–
CPS 2013-B	September 2020		21,251		205,000		18,407		37,570		2.09%
CPS 2013-C	December 2020		26,518		205,000		25,559		46,830		5.88%
CPS 2013-D	March 2021		26,921		183,000		24,917		46,345		5.11%
CPS 2014-A	June 2021		33,120		180,000		30,521		54,988		4.33%
CPS 2014-B	September 2021		46,600		202,500		44,516		75,140		3.67%
CPS 2014-C	December 2021		73,634		273,000		71,174		116,280		3.87%
CPS 2014-D	March 2022		80,784		267,500		79,099		127,307		4.17%
CPS 2015-A	June 2022		89,171		245,000		87,194		134,466		3.73%
CPS 2015-B	September 2022		104,354		250,000		102,873		153,893		3.63%
CPS 2015-C	December 2022		142,703		300,000		141,362		207,636		4.15%
CPS 2016-A	March 2023		182,657		329,460		180,761		262,260		4.45%
CPS 2016-B	June 2023		206,881		332,690		201,199		284,752		4.50%
CPS 2016-C	September 2023		208,815		318,500		203,504		285,618		4.06%
CPS 2016-D	April 2024		153,671		206,325		149,671		200,221		3.14%
CPS 2017-A	April 2024		166,693		206,320		161,892		–		3.31%
CPS 2017-B	December 2023		198,860		225,170		186,594		–		2.90%
CPS 2017-C	September 2024		207,158		224,825		197,155		–		2.83%
CPS 2017-D	June 2024		193,957		196,300		189,277		–		2.74%
		$	2,163,746	$	4,842,590	$	2,095,675	$	2,094,253

___________________

(1)

The Final Scheduled Payment Date represents final legal maturity of the securitization trust debt. Securitization trust debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $873.7 million in 2018, $612.3 million in 2019, $362.5 million in 2020, $179.3 million in 2021, $49.5 million in 2022, and $5.9 million in 2023.

(2)

Includes repossessed assets that are included in Other Assets on our Consolidated Balance Sheets.

Debt issuance costs of $12.5 million and $13.4 million as of December 31, 2017 and December 31, 2016, respectively, have been excluded from the table above. These debt issuance costs are presented as a direct deduction to the carrying amount of the Securitization trust debt on our Consolidated Balance Sheets.

All of the securitization trust debt was issued in private placement transactions to qualified institutional investors. The debt was issued by our wholly-owned, bankruptcy remote subsidiaries and is secured by the assets of such subsidiaries, but not by any of our other assets.

The terms of the various securitization agreements related to the issuance of the securitization trust debt require that certain delinquency and credit loss criteria be met with respect to the collateral pool, and require that we maintain minimum levels of liquidity and net worth and not exceed maximum leverage levels. We were in compliance with all such covenants as of December 31, 2017.

We are responsible for the administration and collection of the contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional credit enhancement for the Notes or to be applied to make payments on the securitization trust debt. As of December 31, 2017, restricted cash under the various agreements totaled approximately $112.0 million. Interest expense on the securitization trust debt is composed of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, insurance premiums, amortization of deferred financing costs, and amortization of discounts required on the notes at the time of issuance. Deferred financing costs related to the securitization trust debt are amortized using the interest method. Accordingly, the effective cost of borrowing of the securitization trust debt is greater than the stated rate of interest.

Our wholly-owned, bankruptcy remote subsidiaries were formed to facilitate the above asset-backed financing transactions. Similar bankruptcy remote subsidiaries issue the debt outstanding under our warehouse line of credit. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. All such transactions, treated as secured financings for accounting and tax purposes, are treated as sales for all other purposes, including legal and bankruptcy purposes. None of the assets of these subsidiaries are available to pay any of our other creditors.