XML 20 R10.htm IDEA: XBRL DOCUMENT

3. Securitization Trust Debt

6 Months Ended

Jun. 30, 2019

(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
	Scheduled	Pledged at				Principal at		Principal at		Interest Rate
	Payment	June 30,		Initial		June 30,		December 31,		at June 30,
Series	Date (1)	2019 (2)		Principal		2019		2018		2019
	(Dollars in thousands)
CPS 2014-A	June 2021		–		180,000		–		15,328		–
CPS 2014-B	September 2021		17,621		202,500		16,123		24,051		5.01%
CPS 2014-C	December 2021		30,305		273,000		29,187		40,896		4.82%
CPS 2014-D	March 2022		34,885		267,500		34,054		46,489		5.17%
CPS 2015-A	June 2022		40,029		245,000		38,299		52,448		4.92%
CPS 2015-B	September 2022		49,220		250,000		49,129		64,591		4.87%
CPS 2015-C	December 2022		70,902		300,000		70,694		90,639		5.31%
CPS 2016-A	March 2023		93,772		329,460		93,582		119,444		5.56%
CPS 2016-B	June 2023		109,505		332,690		106,586		135,688		5.91%
CPS 2016-C	September 2023		109,169		318,500		107,065		136,114		5.73%
CPS 2016-D	April 2024		86,057		206,325		83,989		104,645		4.26%
CPS 2017-A	April 2024		93,378		206,320		91,757		113,527		4.38%
CPS 2017-B	December 2023		113,890		225,170		101,091		127,726		3.74%
CPS 2017-C	September 2024		115,032		224,825		104,137		131,845		3.69%
CPS 2017-D	June 2024		116,795		196,300		106,895		132,919		3.42%
CPS 2018-A	March 2025		124,648		190,000		115,610		142,643		3.35%
CPS 2018-B	December 2024		145,953		201,823		139,191		167,809		3.75%
CPS 2018-C	September 2025		176,932		230,275		167,341		204,418		3.82%
CPS 2018-D	June 2025		203,821		233,730		188,878		224,189		3.86%
CPS 2019-A	March 2026		242,554		254,400		225,776		–		3.82%
CPS 2019-B	June 2026		223,152		228,275		219,826		–		3.00%
		$	2,197,620	$	5,096,093	$	2,089,210	$	2,075,409

(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 $421.4 million in 2019, $693.2 million in 2020, $473.3 million in 2021, $272.5 million in 2022, $181.7 million in 2023, $31.7 million in 2024, $3.4 million in 2025.

(2)

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

Debt issuance costs of $11.9 million and $11.8 million as of June 30, 2019 and December 31, 2018, 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 Unaudited Condensed 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 June 30, 2019, 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 June 30, 2019, restricted cash under the various agreements totaled approximately $125.5 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.

On July 24, 2019 we completed our third securitization transaction of 2019. In the transaction, qualified institutional buyers purchased $243.5 million of asset-backed notes secured by $244.1 million in automobile receivables purchased by us. The sold notes, issued by CPS Auto Receivables Trust 2019-C, consist of six classes. Ratings of the notes were provided by Standard & Poor’s and DBRS, and were based on the structure of the transaction, the historical performance of similar receivables and CPS’s experience as a servicer. The weighted average yield on the notes is approximately 3.36%.