KBRA Assigns Preliminary Ratings to ACC Trust 2019-1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three
classes of notes totaling $174.5 million issued by ACC Trust 2019-1
(“ACC 2019-1”).

This transaction is RAC King, LLC’s (the “Company”) second sub-prime
automobile closed-end lease securitization. The primary asset of ACC
Trust 2019-1 will consist of the i) SUBI certificate, which represents
the beneficial interest in the specified closed-end leases of the
titling trust, ii) the specified vehicles and related assets, including
the right to receive payments under the leases, iii) the amounts
realized from sales of the specified vehicles and iv) amounts in certain
trust accounts, including the reserve account. Credit enhancement for
the Notes consists of i) overcollateralization ii) subordination (in the
case of Class A and Class B Notes) iii) excess spread and iv) a reserve
account. The transaction has initial credit enhancement levels ranging
from 42.50% for the Class A notes, to 22.45% for the Class C notes. The
target enhancement levels for the Class A notes and Class C notes are
47.25% and 27.200%, respectively. As of the cutoff date, and using a
discount rate of 19.00%, the specified pool of leases has an aggregate
Securitization Value of $219.4 million and an undiscounted residual
value of $48.1 million, which is approximately 21.94% of the aggregate
Securitization Value.

The Company owns 100% of RAC Dealership, LLC (dba American Car Center
(“ACC”) and RAC Intermediate Holding, LLC, which owns 100% of RAC
Servicer, LLC (“Servicer”) and RAC Asset Holdings, LLC (dba American
Financial (“AFI”). The organization began operation in 2000. The
Company, through its affiliates, is an integrated used vehicle retailer
that focuses on both the sale and financing of low-mileage vehicles to
subprime customers through vehicle lease agreements. The Company’s
business model controls the entire sale and financing process consisting
of vehicle acquisition, reconditioning, sales, leasing, underwriting,
lease servicing and after-sale support. The Company is headquartered in
Memphis, Tennessee and as of December 31, 2018, had 672 employees and
operated 45 retail locations located in seven states in the Southeast
United States.

KBRA applied its Global General Rating Methodology for Asset-Backed
Securities and also referenced the Global Auto Loan ABS Rating
Methodology as part of its analysis of the transaction’s underlying
collateral pool and the proposed capital structure. KBRA also conducted
an operational assessment of the Company, as well as a review of the
transaction’s legal structure and transaction documents. KBRA will
review the operative agreements and legal opinions for the transaction
prior to closing.

Preliminary Ratings Assigned: ACC 2019-1

             
Class     Preliminary Rating     Principal Balance
A     A (sf)     $130,529,000
B     BBB (sf)     $27,203,000
C     BB (sf)     $16,782,000
       

To access the ratings, pre-sale report and disclosures, click here.

Related Publications: (available
at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.

Contacts

Analytical:
Eric Neglia,
Managing Director
(646) 731-2456
[email protected]

Jenny Ovalle, Director
(646) 731-2309
[email protected]

Andrew Silverhardt, Senior Analyst
(646) 731-2492
[email protected]

Rosemary Kelley, Senior Managing Director
(646) 731-2337
[email protected]

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