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5. Securitization Trust Debt

12 Months Ended

Dec. 31, 2018

(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, 2018 (2)		Initial Principal		Outstanding Principal at December 31, 2018		Outstanding Principal at December 31, 2017		Weighted Average Contractual Interest Rate at December 31, 2018
		(Dollars in thousands)
	CPS 2013-B	September 2020		–		205,000		–		18,407		–
	CPS 2013-C	December 2020		–		205,000		–		25,559		–
	CPS 2013-D	March 2021		–		183,000		–		24,917		–
	CPS 2014-A	June 2021		17,442		180,000		15,328		30,521		5.36	%
	CPS 2014-B	September 2021		26,092		202,500		24,051		44,516		4.42	%
	CPS 2014-C	December 2021		42,912		273,000		40,896		71,174		4.52	%
	CPS 2014-D	March 2022		48,279		267,500		46,489		79,099		4.95	%
	CPS 2015-A	June 2022		54,983		245,000		52,448		87,194		4.49	%
	CPS 2015-B	September 2022		65,736		250,000		64,591		102,873		4.43	%
	CPS 2015-C	December 2022		92,123		300,000		90,639		141,362		4.89	%
	CPS 2016-A	March 2023		121,404		329,460		119,444		180,761		5.18	%
	CPS 2016-B	June 2023		139,696		332,690		135,688		201,199		5.40	%
	CPS 2016-C	September 2023		139,406		318,500		136,114		203,504		5.12	%
	CPS 2016-D	April 2024		107,009		206,325		104,645		149,671		3.84	%
	CPS 2017-A	April 2024		115,991		206,320		113,527		161,892		4.00	%
	CPS 2017-B	December 2023		140,953		225,170		127,726		186,594		3.43	%
	CPS 2017-C	September 2024		142,106		224,825		131,845		197,155		3.35	%
	CPS 2017-D	June 2024		142,370		196,300		132,919		189,277		3.11	%
	CPS 2018-A	March 2025		151,620		190,000		142,643		–		3.13	%
	CPS 2018-B	December 2024		175,363		201,823		167,809		–		3.58	%
	CPS 2018-C	September 2025		214,617		230,275		204,418		–		3.65	%
	CPS 2018-D	June 2025		236,410		233,730		224,189		–		3.74	%
			$	2,174,512	$	5,206,418	$	2,075,409	$	2,095,675

_________________________

(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 $780.0 million in 2019, $587.5 million in 2020, $378.8 million in 2021, $194.6 million in 2022, $116.0 million in 2023, and $6.8 million in 2024.

(2)

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

Debt issuance costs of $11.8 million and $12.5 million as of December 31, 2018 and December 31, 2017, 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, 2018.

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, 2018, restricted cash under the various agreements totaled approximately $117.3 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.