DBRS Rates Westlake Automobile Receivables Trust 2010-1

DBRS has today assigned the provisional ratings to Westlake Automobile Receivables Trust 2010-1 (Westlake 2010-1):

– $100 million Class A rated at AAA
– $20 million Class B rated at “A”

DBRS has assigned provisional ratings to Westlake 2010-1.

The originator is Westlake Services, Inc., a privately held company established in 1978.

The prior securitizations include: a bank funded secured loan revolving facility that is currently outstanding, a privately funded secured loan revolving facility, wrapped by a monoline insurer that has recently paid down and a revolving commercial paper conduit, also wrapped by a monoline insurer that has paid down.

Westlake originates auto loan contracts which are shorter term loans when compared to other originators in the sub-prime auto arena. Eligibility terms for the contracts in this ABS deal require maximum loan terms of 48 months. Westlake focuses on getting potential customers into the right car with the right loan. Towards that goal, Westlake has built a unique front end underwriting platform that helps dealers determine the right loan structure for a customer given all the factors (i.e. term, downpayment, vehicle etc.) involved in deriving a properly structured loan.

The transaction is structured to include 3 classes of notes included in the Westlake 2010-1 - Classes A, B and C. Initial Class A credit support of 43.86% will include Class B Notes (11.63%), Class C Notes (5.81%), a reserve account (2.0%, funded at inception, non-declining) and overcollateralization (24.42%). The overcollateralization will build to 35% of the current securitization value. Additional credit support will be provided by excess spread available in the structure. Initial Class B credit support is 32.23% and includes the Class C notes, reserve account and overcollateralization. The Class C notes will not be rated. Additionally there is a servicer risk reserve account designed to mitigate any commingling risk. The transaction’s enhancement will be increased if a cumulative net loss (CNL) trigger is breached.

The transaction is a sequential-pay liquidating structure with subordinated Class B and Class C notes, declining once the targeted overcollateralization amount is met, but maintains a 65/35 ratio of notes to overcollateralization and a non-declining cash reserve. As such, no principal payments will be made to the holders of the Class B and C Notes until the holders of the Class A Notes are paid in full, or to the holder of the Class C Notes until the Class B Notes are paid in full.

The collateral securing the notes consists primarily of a pool of retail automobile contracts secured by predominantly used vehicles that typically have high mileage. The loans are made to obligors that are categorized as “sub-prime”, predominantly due to their credit history and scores. The pool is a seasoned pool with a weighted average remaining term of 30.3 months. The weighted average original term of these loans is 38.7 months.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is U.S. Retail Auto Loan Securitizations: January 2010, which can be found on our website under Methodologies.

This is a Structured Finance rating.