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5. Securitization Trust Debt

12 Months Ended

Dec. 31, 2019

(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:

										Weighted
										Average
	Final	Receivables				Outstanding		Outstanding		Contractual
	Scheduled	Pledged at				Principal at		Principal at		Interest Rate at
	Payment	December 31,		Initial		December 31,		December 31,		December 31,
Series	Date (1)	2019 (2)		Principal		2019		2018		2019
	(Dollars in thousands)
CPS 2014-A	June 2021		–		180,000		–		15,328		–
CPS 2014-B	September 2021		–		202,500		–		24,051		–
CPS 2014-C	December 2021		–		273,000		19,758		40,896		5.24%
CPS 2014-D	March 2022		24,090		267,500		23,755		46,489		5.53%
CPS 2015-A	June 2022		28,533		245,000		26,713		52,448		5.31%
CPS 2015-B	September 2022		35,509		250,000		36,338		64,591		5.10%
CPS 2015-C	December 2022		52,624		300,000		53,579		90,639		5.77%
CPS 2016-A	March 2023		69,830		329,460		71,599		119,444		6.10%
CPS 2016-B	June 2023		84,403		332,690		82,667		135,688		6.40%
CPS 2016-C	September 2023		85,473		318,500		83,696		136,114		6.42%
CPS 2016-D	April 2024		66,807		206,325		65,021		104,645		4.74%
CPS 2017-A	April 2024		73,549		206,320		71,450		113,527		4.81%
CPS 2017-B	December 2023		89,706		225,170		76,201		127,726		4.14%
CPS 2017-C	September 2024		91,672		224,825		80,315		131,845		4.08%
CPS 2017-D	June 2024		93,992		196,300		83,801		132,919		3.70%
CPS 2018-A	March 2025		100,639		190,000		91,258		142,643		3.61%
CPS 2018-B	December 2024		118,234		201,823		111,188		167,809		4.01%
CPS 2018-C	September 2025		140,405		230,275		130,064		204,418		4.09%
CPS 2018-D	June 2025		164,200		233,730		149,470		224,189		4.08%
CPS 2019-A	March 2026		202,830		254,400		186,900		–		3.95%
CPS 2019-B	June 2026		193,284		228,275		184,308		–		3.58%
CPS 2019-C	December 2026		223,764		243,513		216,650		–		3.02%
CPS 2019-D	March 2027		267,750		274,313		265,035		–		2.60%
		$	2,207,294	$	5,613,919	$	2,109,766	$	2,075,409

_________________________

(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 $806.7 million in 2020, $583.8 million in 2021, $358.1 million in 2022, $261.8 million in 2023, $57.5 million in 2024, and $29.9 million in 2025.

(2)

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

Debt issuance costs of $12.0 million and $11.8 million as of December 31, 2019 and December 31, 2018, 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, 2019.

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, 2019, restricted cash under the various agreements totaled approximately $135.5 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.