Fitch Upgrades PenFed Auto Loan Securitizations Due to Strong Performance
Fitch Ratings has affirmed three classes and upgraded three classes in PenFed Auto Receivables Owner Trust 2022-A.
PenFed Credit Union, the nation's second-largest federal credit union, received notable upgrades to its inaugural prime auto loan securitization offering PenFed Auto Receivables Owner Trust 2022-A (PAROT 2022-A) due to strong performance.
"PenFed is pleased with PAROT 2022's success as we plan to continue leveraging securitization as a tool to increase liquidity and funding options," said Sarah Heintzman, PenFed Credit Union CFO and EVP.
The affirmations and upgrades of the outstanding notes reflect available credit enhancement (CE) and loss performance to date. Overall, cumulative net losses (CNL) are tracking inside the initial base case loss proxy, and hard CE levels have grown for all classes since close. The Stable Outlook on the 'AAAsf'-rated classes reflect Fitch's expectation that the classes have sufficient levels of credit protection to withstand potential deterioration in credit quality of the portfolios in stress scenarios, and that loss coverage will continue to increase as the transactions amortize. The Positive Outlooks for classes C and D reflect the possibility for an upgrade in the next one to two years. Fitch's full rating action commentary can be found here.
PenFed's August 2022 transaction issued $460,292,000 of fixed-rate, amortizing asset-backed notes backed by prime auto loans. The securitization is a private placement offering, which in the United States is offered only to qualified institutional buyers under Rule 144A. The asset-backed notes were offered in four senior and three subordinate tranches of notes and rated by S&P and Fitch.
PenFed has the second-largest consumer loan portfolio among all credit unions across auto, personal, student, consumer loans and credit cards. PenFed also possesses one of the largest auto loan portfolios among federal credit unions, with originations across all 50 states and Puerto Rico.