Securitization Trust Debt

6 Months Ended

Jun. 30, 2023

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: 

Series	Final Scheduled Payment Date (1)	Receivables Pledged at June 30, 2023 (2)		Initial Principal		Outstanding Principal at June 30, 2023		Outstanding Principal at December 31, 2022		Weighted Average Contractual Debt Interest Rate at June 30, 2023
	(Dollars in thousands)
CPS 2018-A	March 2025	$	–	$	190,000	$	–	$	12,939		–
CPS 2018-B	December 2024		–		201,823		–		17,077		–
CPS 2018-C	September 2025		–		230,275		–		20,222		6.07%
CPS 2018-D	June 2025		20,498		233,730		16,011		25,563		5.82%
CPS 2019-A	March 2026		26,513		254,400		21,680		32,898		5.73%
CPS 2019-B	June 2026		28,679		228,275		24,730		33,897		5.56%
CPS 2019-C	September 2026		34,151		243,513		30,129		41,515		4.55%
CPS 2019-D	December 2026		45,068		274,313		39,936		53,625		3.86%
CPS 2020-A	March 2027		42,267		260,000		38,057		52,705		4.18%
CPS 2020-B	June 2027		48,747		202,343		31,860		41,736		6.36%
CPS 2020-C	November 2027		66,427		252,200		56,227		72,894		3.45%
CPS 2021-A	March 2028		70,683		230,545		51,064		72,076		1.49%
CPS 2021-B	June 2028		89,355		240,000		76,336		101,206		2.01%
CPS 2021-C	September 2028		131,240		291,000		113,606		147,593		1.70%
CPS 2021-D	December 2028		178,689		349,202		162,778		209,277		2.00%
CPS 2022-A	April 2029		196,998		316,800		176,857		222,613		2.29%
CPS 2022-B	October 2029		295,399		395,600		266,669		325,907		4.28%
CPS 2022-C	April 2030		332,262		391,600		285,595		346,714		5.34%
CPS 2022-D	June 2030		278,221		307,018		250,805		292,461		7.45%
CPS 2023-A	August 2030		196,998		324,768		281,081		–		6.13%
CPS 2023-B	November 2030		295,399		332,885		316,192		–		6.46%
		$	2,377,595	$	5,750,290	$	2,239,614	$	2,122,919

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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 $409.3 million in 2023, $747.0 million in 2024, $463.2 million in 2025, $288.1 million in 2026, $193.9 million in 2027, $102.9 million in 2028, and $20.7 million in 2029.

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

Debt issuance costs of $14.5 million and $14.2 million as of June 30, 2023 and December 31, 2022, 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 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, 2023, 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, 2023, restricted cash under the various agreements totaled approximately $148.1 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.