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(3) Securitization Trust Debt

6 Months Ended

Jun. 30, 2020

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(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:

Schedule of securitization trust debt Weighted

Average

Final Receivables Outstanding Outstanding Contractual

Scheduled Pledged at Principal at Principal at Interest Rate at

Payment June 30, Initial June 30, December 31, June 30,

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 17,002 267,500 15,647 23,755 5.82 %

CPS 2015-A June 2022 18,894 245,000 17,301 26,713 5.87 %

CPS 2015-B September 2022 26,444 250,000 26,142 36,338 5.45 %

CPS 2015-C December 2022 39,594 300,000 39,739 53,579 6.17 %

CPS 2016-A March 2023 50,410 329,460 53,801 71,599 6.55 %

CPS 2016-B June 2023 62,854 332,690 62,967 82,667 7.08 %

CPS 2016-C September 2023 64,356 318,500 63,748 83,696 7.12 %

CPS 2016-D April 2024 51,487 206,325 49,635 65,021 5.31 %

CPS 2017-A April 2024 57,147 206,320 54,980 71,450 5.26 %

CPS 2017-B December 2023 70,008 225,170 56,243 76,201 4.57 %

CPS 2017-C September 2024 72,442 224,825 61,597 80,315 4.45 %

CPS 2017-D June 2024 74,749 196,300 64,292 83,801 4.01 %

CPS 2018-A March 2025 80,427 190,000 70,616 91,258 3.85 %

CPS 2018-B December 2024 94,479 201,823 86,861 111,188 4.25 %

CPS 2018-C September 2025 111,494 230,275 100,415 130,064 4.36 %

CPS 2018-D June 2025 131,159 233,730 115,229 149,470 4.35 %

CPS 2019-A March 2026 164,744 254,400 147,634 186,900 4.15 %

CPS 2019-B June 2026 159,841 228,275 150,112 184,308 3.74 %

CPS 2019-C September 2026 186,160 243,513 177,905 216,650 3.12 %

CPS 2019-D December 2026 232,484 274,313 223,234 265,035 2.68 %

CPS 2020-A March 2027 232,307 260,000 228,045 – 2.66 %

CPS 2020-B June 2027 216,306 202,343 197,023 – 2.77 %

$ 2,214,788 $ 5,693,762 $ 2,063,166 $ 2,109,766

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(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 $418.1 million in 2020, $664.0 million in 2021, $450.7 million in 2022, $369.3 million in 2023, $80.9 million in 2024, $65.2 million in 2025, and $3.0 million in 2026.

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

Debt issuance costs of $12.0 million as of June 30, 2020 and December 31, 2019 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, 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 June 30, 2020, restricted cash under the various agreements totaled approximately $146.7 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.