Used-Car Dealer Debuts Subprime Auto Bond Even as Sector Weakens
- America’s Car-Mart priced its first asset-backed security
- Loan delinquencies in the sector have increased recently
A car dealer that caters to buyers with checkered credit histories sold asset-backed bonds for the first time ever this week, joining a surge of such sales even while delinquencies rise industrywide as surging inflation hits low-income Americans.
America’s Car-Mart, a used-car retailer focusing on the U.S. South and West, priced its first subprime auto ABS on Thursday, the latest of a string of similar bonds still garnering relatively strong demand from money managers despite rising delinquencies and losses on overall subprime auto loans. The $400 million transaction received a grade of AA- on its senior-most tranche from Kroll Bond Rating Agency and risk premiums on several slices widened out at pricing from guidance levels, signaling the firm likely had to pay a concession to investors as a first-time ABS issuer.