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3. Securitization Trust Debt

3 Months Ended

Mar. 31, 2016

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:

Series		Final Scheduled Payment Date (1)	Receivables Pledged at March 31, 2016 (2)		Initial Principal		Outstanding Principal at March 31, 2016		Outstanding Principal at December 31, 2015		Weighted Average Contractual Interest Rate at March 31, 2016
		(Dollars in thousands)
	CPS 2011-B	September 2018	$	–	$	109,936	$	–	$	10,023		–
	CPS 2011-C	March 2019		11,958		119,400		12,000		14,785		4.91%
	CPS 2012-A	June 2019		14,785		155,000		13,461		16,795		3.09%
	CPS 2012-B	September 2019		22,682		141,500		22,490		26,758		3.06%
	CPS 2012-C	December 2019		26,217		147,000		26,004		30,653		2.36%
	CPS 2012-D	March 2020		33,015		160,000		31,916		37,464		1.90%
	CPS 2013-A	June 2020		50,001		185,000		48,693		56,583		1.80%
	CPS 2013-B	September 2020		62,166		205,000		60,768		70,332		2.33%
	CPS 2013-C	December 2020		73,202		205,000		72,651		82,851		3.68%
	CPS 2013-D	March 2021		72,948		183,000		71,963		82,337		3.19%
	CPS 2014-A	June 2021		82,550		180,000		82,371		92,571		2.67%
	CPS 2014-B	September 2021		108,109		202,500		108,183		121,515		2.35%
	CPS 2014-C	December 2021		165,468		273,000		165,152		183,802		2.54%
	CPS 2014-D	March 2022		178,281		267,500		179,567		198,533		2.75%
	CPS 2015-A	June 2022		184,209		245,000		183,802		201,527		2.57%
	CPS 2015-B	September 2022		207,940		250,000		206,213		221,587		2.64%
	CPS 2015-C	December 2022		271,082		300,000		266,817		283,482		3.03%
	CPS 2016-A	March 2023		328,330		329,460		316,400		–		3.32%
			$	1,892,943	$	3,658,296	$	1,868,451	$	1,731,598

_________________

(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 $555.0 million in 2016, $594.2 million in 2017, $385.4 million in 2018, $216.8 million in 2019, $97.9 million in 2020, $19.2 million in 2021.

(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 $11.6 million as of March 31, 2016 and December 31, 2015, 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. In addition, certain securitization and non-securitization related debt contain cross-default provisions, which would allow certain creditors to declare a default if a default were declared under a different facility. As of March 31, 2016, 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, 2016, restricted cash under the various agreements totaled approximately $126.0 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.