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Securitization Trust Debt
 3 Months Ended
Mar. 31, 2023
Securitization Trust Debt  
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 Debt Interest 
   Scheduled  Pledged at       Principal at   Principal at   Rate at 
   Payment  March 31,   Initial   March 31,   December 31,   March 31, 
Series  Date (1)  2023 (2)   Principal   2023   2022   2023 
   (Dollars in thousands)    
CPS 2018-A  March 2025  $–   $190,000   $–   $12,939    – 
CPS 2018-B  December  2024   –    201,823    –    17,077    – 
CPS 2018-C  September 2025   20,407    230,275    15,873    20,222    6.07% 
CPS 2018-D  June 2025   24,958    233,730    20,639    25,563    5.82% 
CPS 2019-A  March 2026   31,633    254,400    27,107    32,898    5.73% 
CPS 2019-B  June 2026   33,965    228,275    29,262    33,897    5.56% 
CPS 2019-C  September 2026   40,054    243,513    35,650    41,515    4.55% 
CPS 2019-D  December  2026   52,643    274,313    46,672    53,625    3.86% 
CPS 2020-A  March 2027   48,654    260,000    44,845    52,705    4.18% 
CPS 2020-B  June 2027   55,858    202,343    36,595    41,736    6.36% 
CPS 2020-C  November 2027   75,563    252,200    64,089    72,894    3.45% 
CPS 2021-A  March 2028   80,223    230,545    61,051    72,076    1.49% 
CPS 2021-B  June 2028   101,063    240,000    88,714    101,206    2.01% 
CPS 2021-C  September 2028   147,527    291,000    130,671    147,593    1.70% 
CPS 2021-D  December  2028   200,339    349,202    186,363    209,277    2.00% 
CPS 2022-A  April 2029   220,157    316,800    201,403    222,613    2.29% 
CPS 2022-B  October 2029   325,908    395,600    298,734    325,907    4.28% 
CPS 2022-C  April 2030   364,484    391,600    318,725    346,714    5.34% 
CPS 2022-D  August 2030   302,057    307,018    274,951    292,461    7.45% 
CPS 2023-A  November 2030   220,157    324,768    308,120    –    6.13% 
      $2,345,648   $5,417,405   $2,189,463   $2,122,919      

_________________

(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 $644.0 million in 2023, $659.5 million in 2024, $398.9 million in 2025, $239.7 million in 2026, $151.8 million in 2027, $76.0 million in 2028, and $5.2 million in 2029.

 

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

 

 

Debt issuance costs of $14.4 million and $14.2 million as of March 31, 2023 and December 31, 2022, 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 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 March 31, 2023, 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 March 31, 2023, restricted cash under the various agreements totaled approximately $158.9 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.