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3. Securitization Trust Debt
 3 Months Ended
Mar. 31, 2020
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
   Scheduled  Pledged at     Principal at  Principal at  Interest Rate at
   Payment  March 31,  Initial  March 31,  December 31,  March 31,
Series  Date (1)  2020 (2)  Principal  2020  2019  2020
   (Dollars in thousands)   
CPS 2014-C  December 2021   –    273,000    –    19,758    – 
CPS 2014-D  March 2022   20,403    267,500    19,476    23,755    5.72%
CPS 2015-A  June 2022   23,427    245,000    21,623    26,713    5.62%
CPS 2015-B  September 2022   30,831    250,000    31,032    36,338    5.25%
CPS 2015-C  December 2022   45,935    300,000    46,354    53,579    5.95%
CPS 2016-A  March 2023   60,013    329,460    62,489    71,599    6.33%
CPS 2016-B  June 2023   73,496    332,690    72,256    82,667    6.71%
CPS 2016-C  September 2023   75,038    318,500    73,378    83,696    6.86%
CPS 2016-D  April 2024   59,088    206,325    56,965    65,021    5.00%
CPS 2017-A  April 2024   64,901    206,320    62,536    71,450    5.03%
CPS 2017-B  December 2023   79,576    225,170    66,160    76,201    4.32%
CPS 2017-C  September 2024   82,008    224,825    70,376    80,315    4.25%
CPS 2017-D  June 2024   83,976    196,300    74,019    83,801    3.87%
CPS 2018-A  March 2025   90,570    190,000    80,840    91,258    3.71%
CPS 2018-B  December 2024   105,665    201,823    98,424    111,188    4.13%
CPS 2018-C  September 2025   124,843    230,275    114,360    130,064    4.25%
CPS 2018-D  June 2025   146,617    233,730    131,630    149,470    4.21%
CPS 2019-A  March 2026   181,893    254,400    166,520    186,900    4.04%
CPS 2019-B  June 2026   175,677    228,275    166,846    184,308    3.66%
CPS 2019-C  September 2026   204,061    243,513    196,387    216,650    3.06%
CPS 2019-D  December 2026   252,186    274,313    243,816    265,035    2.64%
CPS 2020-A  March 2027   248,762    260,000    248,223    –    2.62%
      $2,228,966   $5,491,419   $2,103,710   $2,109,766      

_________________

(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 $609.0 million in 2020, $627.2 million in 2021, $428.3 million in 2022, $308.8 million in 2023, $69.9 million in 2024, $48.6 million in 2025.

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

 

Debt issuance costs of $12.1 million and $12.0 million as of March 31, 2020 and December 31, 2019, 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 March 31, 2020, 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 March 31, 2020, restricted cash under the various agreements totaled approximately $137.5 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.