Plenty of buyers for Santander Consumer's loans despite conditions declining
Despite delinquencies on US auto loans have been rising and on-going investigations into the industries lending practices Santander Consumer reportedly had little trouble finding buyers for its latest bond deal last week. The $712mn bond comprised of loans to borrowers with significantly lower credit scores than in many of the lenders past bond deals, and Moody&rsquo;s is said to expect losses as high as 27% on the bond vs its projection of 17% on the bond that Santander sold last year.
Delinquencies on auto loans have been rising, more Americans are losing their cars to repossession, and inquiries have begun into the subprime auto industry’s lending practices.

Nevertheless, Santander Consumer USA had little trouble last week finding buyers for its latest bond deal made up of auto loans to borrowers with deeply tarnished credit.

Many of the loans bundled into the $712 million deal went to borrowers with significantly lower credit scores than in many of Santander’s past bond deals. Moody’s Investors Service expects losses as high as 27 percent on the bond, much larger than the 17 percent loss that the ratings firm had projected on a bond that Santander sold last year.

Risks in the market may be multiplying, and some lenders are pulling back. But Santander’s latest deal shows that Wall Street’s appetite for subprime auto loans remains as strong as ever.