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Securitization Trust Debt
 9 Months Ended
Sep. 30, 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 
   Scheduled  Pledged at       Principal at   Principal at   Interest Rate at 
   Payment  September 30,   Initial   September 30,   December 31,   September 30, 
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   –    230,275    –    20,222    0.00%
CPS 2018-D  June 2025   –    233,730    –    25,563    0.00%
CPS 2019-A  March 2026   21,838    254,400    16,739    32,898    5.81%
CPS 2019-B  June 2026   24,211    228,275    19,935    33,897    5.82%
CPS 2019-C  September 2026   29,160    243,513    24,635    41,515    4.90%
CPS 2019-D  December 2026   38,268    274,313    33,693    53,625    4.28%
CPS 2020-A  March 2027   36,578    260,000    31,769    52,705    4.67%
CPS 2020-B  June 2027   42,170    202,343    27,649    41,736    6.88%
CPS 2020-C  November 2027   58,424    252,200    49,298    72,894    3.81%
CPS 2021-A  March 2028   62,378    230,545    44,128    72,076    1.74%
CPS 2021-B  June 2028   78,721    240,000    65,432    101,206    2.31%
CPS 2021-C  September 2028   117,555    291,000    98,915    147,593    1.92%
CPS 2021-D  December 2028   160,217    349,202    143,583    209,277    2.36%
CPS 2022-A  April 2029   177,253    316,800    155,921    222,613    2.65%
CPS 2022-B  October 2029   267,738    395,600    237,944    325,907    4.64%
CPS 2022-C  April 2030   304,257    391,600    255,748    346,714    5.62%
CPS 2022-D  June 2030   255,071    307,018    227,124    292,461    7.73%
CPS 2023-A  August 2030   177,253    324,768    255,056    –    6.25%
CPS 2023-B  November 2030   267,738    332,885    293,825    –    6.53%
CPS 2023-C  February 2031   304,257    291,732    276,438    –    6.61%
      $2,423,087   $6,042,022   $2,257,832   $2,122,918      

_________________

 

(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 $201.0 million in 2023, $844.3 million in 2024, $529.7 million in 2025, $317.1 million in 2026, $206.2 million in 2027, $119.0 million in 2028, and $26.0 million in 2029.
   
(2)Includes repossessed assets that are included in Other assets on our Unaudited Condensed Consolidated Balance Sheet.

 

Debt issuance costs of $14.5 million and $14.2 million as of September 30, 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 September 30, 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 September 30, 2023, restricted cash under the various agreements totaled approximately $142.1 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.