Corporate Announcements

AutoNation, Lithia making progress with captive finance companies

AutoNation Finance

AutoNation Inc.‘s decision to create its own captive finance lender is paying off, with AutoNation Finance helping to improve the retailer’s customer mix, loan originations and more, AutoNation CFO Thomas Szlosek said.

“We love the platform,” Szlosek said on the company’s Feb. 13 fourth-quarter earnings call.

AutoNation paid $85 million for CIG Financial in 2022 and turned it into a captive finance company, using it at first to write loans at AutoNation USA standalone used-car stores. The integration continued with AutoNation ceasing to lend to customers at independent
dealerships and adding the captive finance company as a lender for AutoNation franchise customers.

AutoNation Finance’s post-acquisition evolution has been substantial, Szlosek told analysts.

“It started out entirely as a third-party lender, mostly to subprime” borrowers, Szlosek said. “Over the last year, it completely converted that now to supporting AutoNation exclusively both in AutoNation USA stores as well as the franchise stores with very little in terms of subprime, so it’s really gone through a nice transition.”

Szlosek said that market trends overall in AutoNation have improved as AutoNation Finance has been woven into its operations.

“The trends have been very strong,” he said. “We’ve got an improvement in the origin mix with all AutoNation customers. FICO scores have improved … in terms of what we were originating, and the credit quality trends, the 30-day delinquencies have been really strong.”

As of the third quarter of 2023, borrowers were late on making payments for 7.5 percent of AutoNation Finance’s loans, Szlosek said. That delinquency rate improved by about 2 percentage points through the end of January, he added.

Szlosek said Jeffrey Butler, president of AutoNation Finance and a CIG holdover, has guided the division well, even as he faces higher interest rates and other market challenges

“He’s doing a nice job in what is not an easy environment for consumer credit,” Szlosek said. “We’re happy with that.”

AutoNation Finance has increased its market penetration rates and now handles a roughly $450 million portfolio, even after a sale of a chunk of its business in the third quarter, Szlosek said. The company reported $451.2 million in loan receivables at the end of 2023, up 20 percent from a year earlier.

“We’re excited about 2024,” he said. “We think [loan] originations could double and we just couldn’t be more pleased with how the business has developed over time.”

AutoNation ranks No. 2 on Automotive News’ list of the top 150 dealership groups based in the U.S., with retail sales of 229,971 new vehicles in 2022.

Driveway Finance Co.

Meanwhile, Lithia’s Driveway Finance Co. “looks to achieve break-even later this year,” Lithia CEO Bryan DeBoer said on an earnings call Feb. 14.

Lithia began aggressively developing the current incarnation of its captive finance company, previously known as Southern Cascades Finance Corp., in the fourth quarter of 2020, growing it from acting as the lender in 4 percent of sales and building a $724.9 million portfolio in 2021 to an 11 percent penetration rate and a $3.2 billion loan book in 2023.

Driveway Finance lost $45.9 million in 2023, but Lithia foresees the new initiative could produce up to $10 million in income this year on a $4 billion portfolio while financing 12 percent of U.S. sales. Eventually, Lithia anticipates Driveway Finance playing a role in 15 to 20 percent of sales and producing $550 million to $650 million in income.

“The DFC team has demonstrated success navigating through the fluid interest rate environment, while maturing its capital structure and liquidity position,” DeBoer said on
the earnings call.

He said Driveway Finance had “another strong quarter, with a smaller than expected loss” of $2.1 million. That is down from a $4.4 million loss in the third quarter, Chuck Lietz, Lithia’s senior vice president of finance, said on the call.

Lietz said the weighted average interest rate on Driveway Finance loans rose to 10.3 percent in the fourth quarter, up 2.1 points from a year earlier and 0.3 points from the third quarter.

“As a captive lender sitting at the top of the funnel,” he said, Driveway Finance was able to raise rates without taking riskier borrowers.

“Now that our yield is aligned with the market, we expect penetration will increase in 2024 and beyond as we look to scale,” he said.

Lietz said 86 percent of Driveway Finance’s portfolio has been funded by securitizing and selling bundles of loans or by warehouse financing. Such options free up cash for a lender rather than having to wait and slowly regenerate it with consumer payments over the life of the loan.

Driveway Finance could expand its scope into leasing, other Lithia business segments or internationally someday, Lietz said. However, DeBoer told Automotive News on Feb. 15 he was unsure if leasing would be a priority anytime soon, citing the difficulty of determining vehicles’ residual values at lease end.

Lithia, of Medford, Ore., ranks No. 1 on Automotive News’ list of the top 150 dealership groups based in the U.S., retailing 271,596 new vehicles in 2022. That figure includes vehicles sold outside of the U.S.

AutoNation Finance originations up 74%

AutoNation Finance’s origination volume jumped 74% sequentially in the fourth quarter as the retailer launched captive financing at nearly all its franchised stores by yearend 2023 and saw improved aftermarket product sales.

AutoNation’s captive, formally CIG Financial, originated about $110 million in loans, up from $63 million in Q3, Chief Financial Officer Tom Szlosek said during today’s earnings call. AutoNation Finance’s portfolio stands at about $450 million, he said.

AutoNation Finance projects originations “could double” in 2024, Szlosek said.

“In addition to fully supporting all AN USA stores, we now have AutoNation Finance present in nearly all franchise stores,” he said. “The AutoNation Finance business continues to improve in all dimensions, including penetration in our stores, profitability and delinquency rate.”

Delinquencies decreased by about 200 basis points (bps) through the end of January compared to a rate of about 7.5% in Q3, Szlosek said.

The company continued integrating its captive finance arm across its entire portfolio during the quarter, AutoNation Chief Executive Mike Manley said on the call. In Q4, the retailer also opened AutoNation USA stores in Fort Myers, Fla., and Plano, Texas, which followed openings in Jacksonville, Sanford and Wesley Chapel, Fla. earlier in 2023, he said.

AutoNation operates more than 300 locations nationwide, according to the retailer’s website.

F&I GPU ticks down

• F&I revenue tallied $347.4 million, up 0.7% YoY;
• Full-year F&I revenue decreased 1.3% YoY to $1.4 billion;
• F&I gross profit per unit was $2,674 in Q4, down 1.1% YoY; and
• F&I revenue accounted for 5.1% of AutoNation’s total revenue and 28.6% of total gross profit in Q4, according to the release.

F&I gross profit per vehicle retailed was partially offset by the “shifting of economics related to AutoNation Finance lending,” Szlosek said. “The upfront fees previously received from non-recourse, third-party lenders are now deferred over the life of the AutoNation Finance loan.”

Leasing also picked up at AutoNation, rising to 23% of new-vehicle sales in Q4 compared with 13% a year prior, Szlosek said.

Aftermarket profits up
AutoNation’s product attachment rates increased on new vehicles, according to the presentation.

Aftermarket product sales generated $540 million in gross profit, up 12.7% YoY, while after-sales revenue increased 11% YoY to $1.1 billion, driven by higher repair order volume and elevated value per repair order, according to the presentation. After-sales gross profit market rose 70 bps YoY to 47%.

Aftermarket sales represented about 44% of AutoNation’s total gross profit for the quarter, Szlosek said.

“Customer pay, warranty and internal all experienced double-digit year-over-year growth,” he said. “This high-margin business is a key part of our continued engagement with our customers, and we’re focused on capacity utilization technician development to support the continued growth of the business.”

For the full year, after-sales gross profit reached $2.1 billion, up 13% YoY, according to the release.

“Used-vehicle sales and profitability continue to be a big area of focus for us as we emphasize effective sourcing, pricing and speed while optimizing customer satisfaction,” he said.

AutoNation sold 64,748 new vehicles in Q4, up 7.8% YoY, while used-vehicle sales ticked down 3.6% YoY to 65,151 units.

“Mix between price bands is normalizing,” Manley said. “As a result, we’ve seen lower demand on higher-priced used vehicles partly because of affordability and because new vehicles are becoming more available with a lower net transaction price, which is often accompanied by subsidized lending rates, which makes new product more compelling for a number of our customers,” Manley said.

New-car days’ supply sat at 36 in Q4 compared with 19 a year prior, while used-vehicle supply rose to 39 days compared with 31 days a year earlier.

“Inventory levels are expected to continue to grow in 2024,” Manley said.

Shares of AutoNation [NYSE: AN] were trading at $147.82 as of market close in New York today, down 3.94% from market open. AutoNation has a market capitalization of $6.3 billion.

Creating captives: 2 executives to watch in 2023

Auto Finance News is pleased to present the fourth annual Executives to Watch feature, highlighting two auto finance executives who exude leadership, experience, and vision, and are expected to shake up the industry in 2023 and beyond.

The move brings Butler back to familiar territory, having led consumer financial services at AutoNation for four years before joining CIG in 2012. “For me, it’s coming home,” Butler told AFN.

AutoNation Finance is leveraging CIG’s technology to offer captive financing at AutoNation USA used-vehicle stores, Butler said, adding that AutoNation’s third-party lenders will remain in place. CIG Financial’s legacy business with more than 2,000 dealers in 20 states will also continue in some form as the captive is established, he said.

AutoNation opened its 12th AutoNation USA store in Georgia during the third quarter and plans to build 130 stores across the country by 2026, Butler told AFN.
“As AutoNation embarked on building out their used-car only platform, AutoNation USA, it was imperative that they develop a captive lending capability surrounding that part of the business,” he said. “They thought [CIG Financial] was a good fit based on the stability of the organization and the seniority and experience of our management team.”

AutoNation Finance initially focuses on subprime consumers but will scale up the credit spectrum as growth opportunities arise, Butler said.

“We’re not building these stores to only attract subprime customers; it’s a wide array of inventory to attract a wide array of consumers.”
— Jeff Butler

The captive’s origination volume will largely depend on how quickly AutoNation USA stores come online, Butler said, noting no target has yet been set. AutoNation Finance is currently developing scoring models aligned with its risk appetite.
“We’re taking things slow, building [the captive] correctly and making sure that the foundation is extremely solid before we start to pick up the pace,” he said. The goal is to “build a solid program that supports the AutoNation USA platform and sets it up for long-term success.”

Butler leads by focusing on the entire field and anticipating the needs of the business both in the short- and long-term, said Marie Persichetti, chief financial officer at AutoNation Finance. Persichetti has worked with Butler dating back 25 years in various financial services roles. She joined CIG Financial in 2015.

“Jeff can see the situation unfolding in advance and anticipate what the needs of the business are going to be,” Persichetti said. “He has great vision and the ability to articulate the vision so that people, regardless of their skill set and understanding, can understand what he’s talking about.”

AutoNation Finance over the next three to six months is looking to expand the volume of positive decisions that are automated while continuing to lean on machine learning and artificial intelligence, Butler said.

“Historically, our underwriting has been more manual on the approval side,” he said. “We automate about 10% of the positive decisions that we make, and we want to grow that number.”

Despite now running a larger business at AutoNation, Butler’s leadership style has remained consistent, Persichetti noted.
“’Approachable’ is the word that always comes to mind for me with Jeff. It doesn’t matter whether you are in the field or in the office, he’s approachable,” she said. “People can talk to him about anything and he’s good about taking the time to hear them out. He may not agree with people all of the time, but he’s patient about listening to what they have to say and expressing why he either agrees or doesn’t agree or what his vision might be.”
— Amanda Harris

Vagim thrives on crisis management and is at his “very best” when everything around him is on fire, he told AFN.

“We started the company again with $10 million,” Vagim said. “No lender would talk to us, we were radioactive. We were able to get a $25 million loan from Wells Fargo [Preferred Capital], and we started loaning that one little bit at a time and over the course of 14 years the company got back up to a billion-dollar portfolio.”

Vagim and UACC find themselves facing a new challenge, integrating UACC with Vroom to create captive financier Vroom Financial Services. UACC became a wholly owned subsidiary of Vroom in February upon the closing of a $300 million deal which was first initiated in Oct. 2021.

Since the acquisition, Vroom began scaling UACC-originated loans during the second quarter and UACC has closed two auto asset-backed securitization (ABS) deals. The first deal came in February, totaling $296.2 million, and the second deal came in July totaling $255.1 million.

The lender will continue to execute in capital markets when it’s appropriate for UACC as liquidity is everything in the business but is very expensive during this time, Vagim said.

“Capital markets come and go; they’re fickle,” he said. “We’ve seen these markets … we’ve seen this play out before, and time is our friend. I think that right now liquidity is an even bigger friend.”

UACC is still in the early stages of managing Vroom’s auto book, Vagim said, noting future goals going include the continued build-out the captive by completing technological integration with Vroom and learn from the prime lending on Vroom’s portfolio.

“UACC has been focused just on credit of a subprime and non-prime environment. Vroom is a prime, near-prime [and] super-prime dealer. We have the opportunity to learn from that business, and then take that back to our dealer body on the independent business and be more impactful to that dealer’s bottom line.”
— Jim Vagim

When it comes to leadership, Vagim considers himself to be a servant leader who is driven by the success of the people around him, he said. He prioritizes the mental health and wellness of his employees because he wants them to enjoy the job they are doing and understand the bigger mission of the company to help it succeed, he noted.

“Jim is incredibly high energy,” Bruce Newmark chief operating officer at UACC told AFN. “He has always had a desire to have people flourish in their environment, and he is big on coming up with ideas for how we’re going to better the business and better our people.”

During the COVID-19 pandemic, Vagim started an initiative at UACC to provide educational resources to employee’s children while they were stuck at home, Newmark said. Vagim helped bring in certified teachers who built curriculum and organized study halls to help the kids learn from home while their parents were working, he noted.

“The general theme [with Vagim] is really about how to not only better people’s stations in life, but our business as well,” Newmark said.
— Riley Wolfbauer

Auto Finance Summit East, Auto Finance News’ new spring event, kicks off May 10-12 at the JW Marriott Nashville. To learn more about the 2023 spring event and register, visit autofinance.live/afs-east.

Automotive New: AutoNation slowly integrates captive CIG Financial

Acquisition of Captive Finance Capabilities

DBRS Morningstar Finalizes Its Provisional Ratings on CIG Auto Receivables Trust 2021-1

NOVEMBER 09, 2021

AUTO
DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes (the Notes) issued by CIG Auto Receivables Trust 2021-1 (CIGAR 2021-1):

— $105,810,000 Class A Notes rated AAA (sf)
— $16,280,000 Class B Notes rated AA (high) (sf)
— $8,140,000 Class C Notes rated AA (low) (sf)
— $23,990,000 Class D Notes rated BBB (sf)
— $11,140,000 Class E Notes rated BB (sf)

The ratings are based on DBRS Morningstar’s review of the following analytical considerations:
— Transaction capital structure, proposed ratings, and form and sufficiency of available credit enhancement.

— Credit enhancement is provided in the form of subordination, OC, a fully funded reserve fund, and excess spread. Credit
enhancement levels are sufficient to support the DBRS Morningstar expected loss assumptions under various stress scenarios for the assigned ratings.

— The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the rating addresses the timely payment of interest on a monthly basis and payment of principal by the legal final maturity date.

— The CIG senior management team has considerable experience and a successful track record within the auto finance industry, having managed the company through multiple economic cycles.

— The capabilities of CIG Financial, LLC (CIG) with regard to originations, underwriting, and servicing.

— The quality and consistency of provided historical static pool data for CIG originations and performance of the CIG auto loan portfolio.

— DBRS Morningstar’s projected losses include the assessment of the impact of the Coronavirus Disease (COVID-19) pandemic.

While considerable uncertainty remains with respect to the intensity and duration of the shock, DBRS Morningstar-projected CNL includes an assessment of the expected impact on consumer behavior. The DBRS Morningstar CNL assumption is 11.55% based on the expected cut-off date pool composition.

— The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios For Rated Sovereigns,” published on September 8, 2021. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020. The baseline macroeconomic scenarios reflect the view that, although COVID-19 remains a risk to the outlook, uncertainty around the macroeconomic effects of the pandemic has gradually receded.
Current median forecasts considered in the baseline macroeconomic scenarios incorporate some risks associated with further outbreaks, but remain fairly positive on recovery prospects given expectations of continued fiscal and monetary policy support. The policy response to COVID-19 may nonetheless bring other risks to the forefront in the coming months and years.

— The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the nonconsolidation of the special purpose vehicle with CIG, that the trust has a valid first-priority security interest in the assets, and the consistency with the DBRS Morningstar “Legal Criteria for U.S. Structured Finance.”

The CIGAR 2021-1 transaction represents the fourth public term securitization of subprime auto loans and offers both senior and subordinate rated securities.

The rating on the Class A Note reflects the 39.25% of initial hard credit enhancement provided by the subordinated notes in the pool (34.75%), the Reserve Account (1.00%), and overcollateralization (3.50%). The ratings on the Class B, C, D, and E Notes reflect 29.75%, 25.00%, 11.00%, and 4.50% of initial hard credit enhancement, respectively. Additional credit support may be provided from excess spread available in the structure.

ESG CONSIDERATIONS

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:

All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Retail Auto Loan Securitizations (May 10, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: http://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

DBRS, Inc.
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Tel. +1 (212) 806 3277

Ratings

CIG Auto Receivables Trust 2021-1

ALL DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS. ADDITIONAL INFORMATION REGARDING DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON https://www.dbrsmorningstar.com/.

Contacts

The DBRS Morningstar group of companies consists of DBRS, Inc. (Delaware, U.S.)(NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada)(DRO, NRSRO affiliate); DBRS Ratings GmbH (Frankfurt, Germany)(EU CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings Limited (England and Wales)(UK CRA, NRSRO affiliate, DRO affiliate). For more information on regulatory registrations, recognitions and approvals of the DBRS Morningstar group of companies, please see: https://www.dbrsmorningstar.com/research/highlights.pdf.

The DBRS Morningstar group of companies are wholly-owned subsidiaries of Morningstar, Inc. © 2021 DBRS Morningstar. All Rights Reserved.

The information upon which DBRS Morningstar ratings and other types of credit opinions and reports are based is obtained by DBRS Morningstar from sources DBRS Morningstar believes to be reliable. DBRS Morningstar does not audit the information it receives in connection with the analytical process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS Morningstar ratings, other types of credit opinions, reports and any other information provided by DBRS Morningstar are provided “as is” and without representation or warranty of any kind. DBRS Morningstar hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS Morningstar or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Morningstar Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS Morningstar or any DBRS Morningstar Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. No DBRS Morningstar entity is an investment advisor. DBRS Morningstar does not provide investment, financial or other advice. Ratings, other types of credit opinions, other analysis and research issued or published by DBRS Morningstar are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness, investment, financial or other advice or recommendations to purchase, sell or hold any securities. A report with respect to a DBRS Morningstar rating or other credit opinion is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS Morningstar may receive compensation for its ratings and other credit opinions from, among https://www.dbrsmorningstar.com/disclaimer/ others, issuers, insurers, guarantors and/or underwriters of debt securities. DBRS Morningstar is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS Morningstar shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS Morningstar. ALL DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT https://www.dbrsmorningstar.com/about/disclaimer. ADDITIONAL INFORMATION REGARDING DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON https://www.dbrsmorningstar.com. Users may, through hypertext or other computer links, gain access to websites operated by persons other than DBRS Morningstar. Such hyperlinks are provided for convenience only, and are the exclusive responsibility of the owners of such websites. DBRS Morningstar does not endorse the content, the operator or operations of third party websites. DBRS Morningstar is not responsible for the content or operation of such websites and DBRS Morningstar shall have no liability to you or any other person or entity for the use of third party websites.

Moody’s Investors Service

Rating Action: Moody’s upgrades auto loan ABS issued by CIG Auto Receivables Trust in 2019 and 2020

Approximately $47 million of asset-backed securities affected

New York, November 12, 2021 — Moody’s Investors Service (“Moody’s”) has upgraded one class of notes issued by CIG Auto Receivables Trust 2019-1 (CIGAR 2019-1), and two classes of notes issued by CIG Auto Receivables Trust 2020-1 (CIGAR 2020-1). The notes are backed by a pool of retail automobile loan contracts originated by CIG Financial LLC (CIG; Unrated), which is also the servicer and sponsor for the transactions.

The complete rating actions are as follows:

Issuer: CIG Auto Receivables Trust 2019-1
Class D Notes, Upgraded to A3 (sf); previously on Jul 27, 2021 Upgraded to Baa1 (sf)

Issuer: CIG Auto Receivables Trust 2020-1
Class D Notes, Upgraded to Aa3 (sf); previously on Jul 27, 2021 Upgraded to A1 (sf)
Class E Notes, Upgraded to Ba1 (sf); previously on Apr 27, 2021 Upgraded to Ba2 (sf)

RATINGS RATIONALE

The upgrades are primarily driven by the buildup of credit enhancement due to structural features including a sequential pay structure, reserve account and overcollateralization as well as a reduction in our cumulative net loss expectations for the underlying pools.

Our lifetime cumulative net loss expectation is 10.5% for CIGAR 2019-1 and CIGAR 2020-1. The loss expectations reflect updated performance trends on the underlying pools. More recently US consumers have shown a high degree of resilience owing to the government stimulus and the relief options offered by servicers.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was “Moody’s Global Approach to Rating Auto Loan- and Lease-Backed ABS” published in September 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1264141 . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology

Factors that would lead to an upgrade or downgrade of the ratings:

Up

Levels of credit protection that are greater than necessary to protect investors against current expectations of loss could lead to an upgrade of the ratings. Losses could decline from Moody’s original expectations as a result of a lower number of obligor defaults or greater recoveries from the value of the vehicles securing the obligors’ promise of payment. The US job market and the market for used vehicles are also primary drivers of the transactions’ performance. Other reasons for better-than-expected performance include changes in servicing practices to maximize collections on the loans or refinancing opportunities that result in a prepayment of the loan.

Down

Levels of credit protection that are insufficient to protect investors against current expectations of loss could lead to a downgrade of the ratings. Losses could increase from Moody’s original expectations as a result of a higher number of obligor defaults or a deterioration in the value of the vehicles securing the obligors’ promise of payment. The US job market and the market for used vehicles are also primary drivers of the transactions’ performance. Other reasons for worse-than-expected performance include poor servicing, error on the part of transaction parties, lack of transactional governance and fraud.

REGULATORY DISCLOSURES

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody’s estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody’s quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows. Moody’s weights the impact on the rated instruments based on its assumptions of the likelihood of the events in such scenarios occurring.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

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© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY’S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY’S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody’s Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody’s Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

Moody’s Investors Service

Rating Action: Moody’s assigns definitive ratings to CIG Auto Receivables Trust 2021-1 notes

09 Nov 2021

Approximately $165 million of asset-backed securities rated

New York, November 09, 2021 — Moody’s Investors Service (“Moody’s”) has assigned definitive ratings to the notes issued by CIG Auto Receivables Trust 2021-1 (CIGAR 2021-1). This is the first auto loan transaction of the year for CIG Financial, LLC (CIG; Unrated). The notes are backed by a pool of retail automobile loan contracts originated by CIG, who is also the servicer and administrator for the transaction.

The complete rating actions are as follows:

Issuer: CIG Auto Receivables Trust 2021-1

$105,810,000, 0.69%, Class A Notes, Definitive Rating Assigned Aaa (sf)
$16,280,000, 1.49%, Class B Notes, Definitive Rating Assigned Aa1 (sf)
$8,140,000, 1.79%, Class C Notes, Definitive Rating Assigned Aa3 (sf)
$23,990,000, 2.11%, Class D Notes, Definitive Rating Assigned Baa1 (sf)
$11,140,000, 4.45%, Class E Notes, Definitive Rating Assigned Ba3 (sf)

RATINGS RATIONALE

The ratings are based on the quality of the underlying collateral and its expected performance, the strength of the capital structure, the experience and expertise of CIG as servicer and administrator, and the presence of Wilmington Trust, National Association (long-term CR assessment A1(cr) negative) as named backup servicer.

Moody’s median cumulative net loss expectation for the 2021-1 pool is 12.0% and the loss at a Aaa stress is 45%. The expected loss is lower by 2 percentage points than our initial expected loss for CIGAR 2020-1, the last transaction that we rated. Moody’s based its cumulative net loss expectation on an analysis of the credit quality of the underlying collateral; the historical performance of similar collateral, including securitization performance and managed portfolio performance; the ability of CIG to perform the servicing functions; and current expectations for the macroeconomic environment during the life of the transaction.

At closing, the Class A notes, Class B notes, Class C notes, Class D notes and Class E notes are expected to benefit from 39.25%, 29.75%, 25.00%, 11.00%, and 4.50%, of hard credit enhancement, respectively. Hard credit enhancement for the notes consists of a combination of overcollateralization, a non-declining reserve account and subordination except for the Class E notes which do not benefit from subordination. The notes may also benefit from excess spread.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was “Moody’s Global Approach to Rating Auto Loan- and Lease-Backed ABS” published in September 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1264141. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Factors that would lead to an upgrade or downgrade of the ratings:

Up

Moody’s could upgrade the subordinated notes if, given current expectations of portfolio losses, levels of credit enhancement are consistent with higher ratings. In sequential pay structures, such as the one in this transaction, credit enhancement grows as a percentage of the collateral balance as collections pay down senior notes. Prepayments and interest collections directed toward note principal payments will accelerate this build of enhancement. Moody’s expectation of pool losses could decline as a result of a lower number of obligor defaults or appreciation in the value of the vehicles securing an obligor’s promise of payment. Portfolio losses also depend greatly on the US job market, the market for used vehicles, and changes in servicing practices.

Down

Moody’s could downgrade the notes if, given current expectations of portfolio losses, levels of credit enhancement are consistent with lower ratings. Credit enhancement could decline if excess spread is not sufficient to cover losses in a given month. Moody’s expectation of pool losses could rise as a result of a higher number of obligor defaults or deterioration in the value of the vehicles securing an obligor’s promise of payment. Portfolio losses also depend greatly on the US job market, the market for used vehicles, and poor servicing. Other reasons for worse-than-expected performance include error on the part of transaction parties, inadequate transaction governance, and fraud.

REGULATORY DISCLOSURES

For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1308749.

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody’s estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody’s quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows. Moody’s weights the impact on the rated instruments based on its assumptions of the likelihood of the events in such scenarios occurring.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY’S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY’S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY’S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody’s Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody’s Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a whollyowned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

CIG Financial President Jeffrey Butler Nominated For Top Auto Finance Innovator

DBRS Morningstar Takes Rating Actions on CIG Auto Receivables Trust 2019-1

DBRS, Inc. (DBRS Morningstar) confirmed or upgraded its ratings on the following classes of securities included in CIG Auto Receivables Trust 2019-1:

— Class A Notes, upgraded to AAA (sf)
— Class B Notes, upgraded to AA (sf)
— Class C Notes, upgraded to A (sf)
— Class D Notes, confirmed at BB (sf)

The rating actions are based on the following analytical considerations:
— The transaction assumptions consider DBRS Morningstar’s set of macroeconomic scenarios for select economies related to the Coronavirus Disease (COVID-19), available in its commentary “Global Macroeconomic Scenarios: September Update,” published on September 10, 2020. DBRS Morningstar initially published macroeconomic scenarios on April 16, 2020, which have been regularly updated. The scenarios were last updated on September 10, 2020 and are reflected in DBRS Morningstar’s rating analysis.

— The assumptions consider the moderate macroeconomic scenario outlined in the commentary, with the moderate scenario serving as the primary anchor for current ratings. The moderate scenario remains predicated on a more rapid return of confidence and a steady recovery heading into 2021. Observed performance during the 2008–09 financial crisis and the possible impact from stimulus were also considered in the assumptions.

— Transaction’s capital structure, and form and sufficiency of available credit enhancement. The current level of hard credit enhancement and estimated excess spread are sufficient to support the DBRS Morningstar-projected remaining cumulative net loss (CNL) (including an adjustment for the moderate scenario) assumption at a multiple of coverage commensurate with the ratings above.

— The collateral performance to date and DBRS Morningstar’s assessment of future performance, including upward revisions to the expected CNL assumptions consistent with the expected unemployment levels in the moderate scenario.

— The transaction parties’ capabilities with regard to origination, underwriting, and servicing.

CIG Auto Receivables Trust 2020-1– CIG Financials’ third CIGAR issuance

Summary CIG Auto Receivables Trust 2020-1 (CIGAR 2020-1) is the third securitization under the CIGAR platform of non-prime-quality1 retail installment auto loan contracts originated or acquired and serviced by CIG Financial, LLC (CIG). Key credit strengths of the transaction include CIG’s strong managed portfolio performance, the improved seasoning relative to the prior transaction and the absence of prefunding. Credit challenges include an unrated and small servicer and CIG’s limited prior securitization experience.

Moody’s ratings Classes Rating Amount (millions) % of Assets Legal final maturity Coupon Reserve fund Total initial hard CE*