Consumer Portfolio Services, Inc. (CPSS) closed its 58th senior subordinate securitization on January 27, 2026, issuing $345.61 million of asset‑backed notes backed by $352.66 million of automobile receivables. The transaction was structured through the CPS Auto Receivables Trust 2026‑A and received triple‑A ratings from Standard & Poor’s and DBRS Morningstar for the senior class of notes.
The notes carry a weighted average coupon of 5.18% and are supported by a cash deposit equal to 1.00% of the original receivable pool balance and 2.00% over‑collateralization. These credit enhancements, combined with the isolation of the receivables within a trust, underpin the AAA rating and provide investors with a robust risk‑adjusted return profile.
CPSS has executed 58 senior subordinate securitizations since 2011, and this deal marks the 41st consecutive transaction to receive AAA ratings from at least two rating agencies. In comparison, the company’s 2025 securitizations ranged from $418.33 million in July to $442.4 million in January, indicating that the current deal is slightly smaller but maintains the same high credit quality and leverage profile.
The securitization reinforces CPSS’s core strategy of funding its subprime auto loan portfolio through the capital markets. By moving the receivables off its balance sheet, CPSS reduces leverage and preserves capital, enabling continued origination growth. The structure’s credit enhancement and isolation of assets also mitigate risk for investors, which is critical in a market where some prior series have shown weaker-than‑expected collateral performance.
S&P Global Ratings noted that while the collateral pool is comparable to previous series, certain earlier CPSART series (particularly 2022 and 2023) performed below initial loss expectations. This highlights a potential headwind in the subprime auto sector, but the AAA rating and strong credit enhancements suggest that CPSS’s risk management remains effective.
The transaction comes amid a broader economic backdrop of a steady U.S. outlook in Q1 2026, with analysts noting that credit conditions remain tight but manageable for specialty finance firms. CPSS’s ability to secure AAA ratings in this environment underscores its resilience and positions it well to capitalize on future origination opportunities.
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