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(3) Securitization Trust Debt
 9 Months Ended
Sep. 30, 2021
Securitization Trust Debt  
(3) Securitization Trust Debt

(3) Securitization Trust Debt

 

We have completed many securitization transactions that are structured as secured borrowings for financial accounting purposes. The debt issued in these transactions is shown on our Unaudited Condensed 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  September 30,   Initial   September 30,   December 31,   September 30, 
Series  Date (1)  2021 (2)   Principal   2021   2020   2021 
   (Dollars in thousands)    
CPS 2016-A  March 2023   –    329,460    –    37,158    – 
CPS 2016-B  June 2023   –    332,690    –    46,079    – 
CPS 2016-C  September 2023   26,578    318,500    25,373    47,325    8.39% 
CPS 2016-D  April 2024   22,636    206,325    19,402    36,455    6.86% 
CPS 2017-A  April 2024   25,943    206,320    22,163    40,619    6.84% 
CPS 2017-B  December  2023   32,980    225,170    17,592    39,016    5.75% 
CPS 2017-C  September 2024   35,175    224,825    30,272    47,553    5.40% 
CPS 2017-D  June 2024   36,323    196,300    31,136    49,297    4.77% 
CPS 2018-A  March 2025   40,366    190,000    34,447    53,549    4.54% 
CPS 2018-B  December  2024   49,034    201,823    42,028    66,955    4.98% 
CPS 2018-C  September 2025   55,619    230,275    49,803    77,345    5.14% 
CPS 2018-D  June 2025   67,792    233,730    57,940    88,228    4.98% 
CPS 2019-A  March 2026   84,896    254,400    72,357    114,373    4.76% 
CPS 2019-B  June 2026   83,881    228,275    72,804    118,982    4.42% 
CPS 2019-C  September 2026   98,171    243,513    88,668    142,080    3.62% 
CPS 2019-D  December  2026   126,247    274,313    115,544    181,485    3.09% 
CPS 2020-A  March 2027   121,595    260,000    117,252    184,944    3.18% 
CPS 2020-B  June 2027   127,469    202,343    104,048    164,403    4.18% 
CPS 2020-C  November 2027   172,254    252,200    162,049    231,961    2.11% 
CPS 2021-A  March 2028   186,415    230,545    171,918    –    0.88% 
CPS 2021-B  June 2028   211,244    240,000    203,796    –    1.14% 
CPS 2021-C  September 2028   286,516    291,000    276,228    –    1.04% 
      $1,891,134   $5,372,007   $1,714,820   $1,767,807      

 _________________

 

(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 $208.3 million in 2021, $606.7 million in 2022, $516.1 million in 2023, $129.9 million in 2024, $146.5 million in 2025, $73.9 million in 2026, and $21.5 million in 2027.

 

(2)Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet.

 

Debt issuance costs of $11.4 million and $10.6 million as of September 30, 2021 and December 31, 2020, 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 Unaudited Condensed Consolidated Balance Sheets.

 

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

 

The terms of the securitization agreements related to the issuance of the securitization trust debt and the warehouse credit facilities require that we meet certain delinquency and credit loss criteria with respect to the pool of receivables, and certain of the agreements require that we maintain minimum levels of liquidity and not exceed maximum leverage levels. As of September 30, 2021, we were in compliance with all such covenants.

 

We are responsible for the administration and collection of the automobile contracts. The securitization agreements also require certain funds be held in restricted cash accounts to provide additional collateral for the borrowings, to be applied to make payments on the securitization trust debt or as pre-funding proceeds from a term securitization prior to the purchase of additional collateral. As of September 30, 2021, restricted cash under the various agreements totaled approximately $145.0 million. Interest expense on the securitization trust debt consists of the stated rate of interest plus amortization of additional costs of borrowing. Additional costs of borrowing include facility fees, amortization of deferred financing costs and discounts on notes sold. Deferred financing costs and discounts on notes sold related to the securitization trust debt are amortized using a level yield method. Accordingly, the effective cost of the securitization trust debt is greater than the contractual rate of interest disclosed above.

 

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 credit facilities. 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 other creditors.