Used-Car Dealer Halts Plans for Subprime Auto Loan Offering
(Bloomberg) -- Private equity-backed used-car dealer Byrider chose not to proceed with its latest subprime auto asset-backed security deal, a sign that investors may be growing reluctant to buy some lower-rated securitizations.
Deutsche Bank AG, which was leading the proposed deal, began to privately market the transaction to select investors in September, according to people familiar with the matter, asking not to be identified as the details are private.
Carmel, Indiana-based Byrider caters to borrowers with “deep” subprime credit scores, which are typically below 580. It has been selling bonds backed by its subprime car loans for more than a decade.
As interest rates rise and delinquencies among borrowers with poor credit scores soar, investors are increasingly scrutinizing the riskiest slices of asset-backed securities sold by some subprime auto lenders. That’s forced certain issuers to postpone deals or sweeten terms.
Texas-based lender Tricolor Holdings LLC postponed a $259 million offering earlier this month and Bridgecrest last week sold subordinate tranches of its notes outside of guided price talk, meaning the issuer had to pay up by offering a higher spread to get the deal done.
As for Byrider, the company declined to comment on its latest deal. Founded in 1989 as J.D. Byrider, the business was bought by private equity firm Altamont Capital Partners in 2011, and more recently rebranded and changed its name to Byrider.