Consumer Portfolio Services Inc. entered into a series of agreements under which its subsidiary CPS Receivables Five LLC bought from the company and then sold $161.7 million of subprime automotive receivables to CPS Auto Receivables Trust 2017-C.
CPS Receivables Five also agreed to buy an additional $68.3 million in similar automotive receivables, with the intention of selling them to the trust as well, according to a Form 8-K filed Aug. 1.
The company committed to sell the $161.7 million in receivables by Sept. 9 to CPS Receivables Five, which also agreed to sell them to the trust. Under the agreements, the trust deposited the $161.7 million in receivables with indenture trustee Wells Fargo Bank, with which the trust also agreed to deposit the $68.3 million in receivables at a later date.
The trust issued and sold about $224.8 million of asset-backed notes in five classes, as previously announced. Once the sale of the $68.3 million of receivables is completed to the trust, it will hold a fixed pool of amortizing assets. The trust is obligated to pay principal and interest on the notes every month.
About $105.8 million initial principal amount of class A notes will bear interest at 1.78%; $35.1 million initial principal amount of class B notes will bear interest at 2.30%; about $31.1 million initial principal amount of class C notes will bear interest at 2.86%; $27.6 million initial principal amount of class D notes will bear interest at 3.79%; and $25.3 million initial principal amount of class E notes will bear interest at 5.72%.
Part of the proceeds will go to Wells Fargo as trustee for the note holders' benefit, and will be designated for buying subsequent receivables. A cash deposit in the amount of 1.00% of the aggregate balance of the $161.7 million of receivables was also pledged for the benefit of the note holders.
Security for the notes repayment includes the receivables and the rights to payments related to such receivables. Consumer Portfolio Services purchased the receivables from automobile dealers, and the company will act as the servicer of the receivables. The notes' credit enhancement consists of overcollateralization and the reserve account.
Wells Fargo will act as the collateral agent and trustee on behalf of the secured parties, and is the backup servicer.