NEW YORK–(BUSINESS WIRE)–#KBRA–KBRA assigns preliminary ratings to four classes of notes issued by ACM Auto Trust 2023-1 (“ACMAT 2023-1”), a subprime auto loan ABS transaction.
ACMAT 2023-1 represents the second rated ABS securitization sponsored by America’s Car Mart, Inc., an Arkansas corporation and subsidiary of America’s Car-Mart (“Car-Mart” or the “Company”), a publicly traded Texas corporation. ACMAT 2023-1 will issue four classes of notes totaling $400.19 million, collateralized by loans directly originated by America’s Car Mart, Inc. and Texas Car-Mart, Inc., also a subsidiary of Car-Mart. Credit enhancement consists of overcollateralization, subordination of junior note classes, a reserve account funded at closing, and excess spread.
Car-Mart is a used vehicle retailer headquartered in Rogers, Arkansas that focuses on both the sale and financing of vehicles to subprime borrowers whose FICO scores are 620 and below. The Company’s business model consists of vehicle acquisition, reconditioning, sales, underwriting, financing, loan servicing and after-sales support. Car-Mart’s operations are principally conducted through three operating subsidiaries, i) America’s Car Mart, Inc., an Arkansas corporation, ii) Texas Car-Mart, Inc. a Texas corporation, and iii) Colonial Auto Finance, Inc., an Arkansas corporation. Car-Mart primarily sells older-model used vehicles with an average age of ten years and is the sole provider of financing to its customers. Many of the Company’s borrowers have experienced prior credit difficulties or have limited credit bureau histories. As of December 31, 2022, the Company operates a network of 154 dealerships in twelve states, all of which are Company-owned. The Company’s primary geographical focus is on small cities with populations of approximately 50,000 or less throughout the South-Central United States. Car-Mart launched its auto contract originations business in 1981 and completed its IPO in 1999. The Company’s stock trades on the NASDAQ under the ticker symbol “CRMT”.
KBRA applied its Auto Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the static pool data and the underlying collateral pool and stressed the capital structure based upon its stress case cash flow assumptions. KBRA considered its operational review of Car-Mart as well as several business updates with the Company since that time. Operative agreements and legal opinions will be reviewed prior to closing.
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- Auto Loan ABS Global Rating Methodology
- Global Structured Finance Counterparty Methodology
- ESG Global Rating Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
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