S&P Rts AmeriCredit Automobile Rec Trust Fltg-Rt Nts

Business Wire, August 21, 1998

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/21/98--Standard & Poor's today assigned its triple-'A' rating to AmeriCredit Automobile Receivables Trust's 1998-C's class A-2, A-3, and A-4 floating-rate asset-backed notes and its 'A-1'-plus rating to the trust's Class A-1 asset-backed notes (see list below).

The rating on the floating-rate notes is based on the insurance policies provided by FSA Inc. (triple-'A' financial strength rating) (see list below). Under these policies FSA unconditionally and irrevocably guarantees payment of scheduled principal and interest. While FSA is also insuring the class A-1 5.638% notes, Standard & Poor's rating on these notes is not based on the policy, but rather on internal credit support and conservative cash flow projections.

Standard & Poor's has determined that the underlying transaction risk assumed by FSA is consistent with an investment-grade rating based on a sound legal structure and internal credit support. First loss credit coverage consists of a cash reserve, overcollateralization of 10% that will be obtained by using excess spread and 100% of principal collections to retire the notes sequentially beginning with the class A-1 notes, and additional ongoing monthly excess spread.

The class A-1 notes have a legal final maturity of 13 months and benefit from 100% of principal collections and excess spread until they are retired. Standard & Poor's utilized conservative cash flow assumptions to test cash flow coverage of timely interest and repayment of principal by the final maturity without drawing on FSA's insurance policy. These assumptions included a slow absolute prepayment speed (ABS) of 0.5%, zero losses, high delinquencies, purchase of subsequent receivables on the last day of the funding period Oct. 31, 1998, and a 7% interest rate on the LIBOR based floating-rate notes. While the rate to investors on these floating-rate notes is uncapped, the trust has purchased a cap from an investment grade counterparty that promises to pay investors the difference between LIBOR and 7%. The 7% LIBOR was used to minimize excess spread that would be available to turbo the A-1 class. The originator and servicer of the receivables is AmeriCredit Financial Services Inc., a wholly owned subsidiary of AmeriCredit Corp. AmeriCredit purchases indirect subprime auto receivable contracts from manufacturer-franchised dealers and independent used car dealers. The company's mix of business has steadily moved toward franchised dealers as they represented 90% of the volume purchased during the fiscal year ended June 30, 1998, compared to 83% for the fiscal year ended June 30,1997, 77% for the fiscal year ended June 30, 1996, and 68% for the fiscal year ended June 30, 1995. AmeriCredit's underwrites receivables through its 129 branch offices and collects and services them in its three collection centers in Fort Worth, Texas, Tempe, Ariz., and Charlotte, N.C. Due to geographical expansion and increased penetration in existing markets, AmeriCredit's serviced portfolio doubled two years in row, increasing to $2.3 billion at June 30, 1998 from $1.1 billion at June 30, 1997, and $500 million at June 30, 1996.

Despite rapid growth in AmeriCredit's portfolio over the last two years, its performance has been stable and is beginning to improve. Delinquencies (including unsold repossessions) declined to 8.9% at June 30, 1998 from 11.0% at June 30, 1997, and 10.6% at June 30, 1996. In addition, net charge-offs decreased to 5.3% for the fiscal year ended June 30, 1998 compared to 5.5% for the same period last year. The improvement is attributable to AmeriCredit broadening its credit spectrum to include less risky borrowers as evidenced by the APR on its securitized pools shrinking to 18.4%, from 20.4% two years ago.

The trust is composed of $500 million in subprime retail installment sales contracts and $75 million in the prefunding account. Overall, the pool appears to be of slightly better credit quality than AmeriCredit's last transaction, 1998-B. The weighted average annual percentage rate for the 1998-C notes is 18.4%, compared to 18.8% for 1998-B and the percentage of new cars has increased to approximately 22% from 1998-B's 16%. The weighted average original maturity of the contracts is unchanged at 57 months and the weighted average remaining maturity is 57 months versus 55 months for 1998-B. While the company has started to offer 72-month contract terms to its better quality obligors, these longer term contracts represent less than 1% of the securitized pool. The largest state concentrations continue to be California (14%) and Texas (9.5%).

Standard & Poor's expects the 1998-C pool to experience cumulative net losses between 9.0%-10.5%. Internal credit enhancement in the form of a spread account, 10% overcollateralization, additional monthly excess spread, and stressed cash flows provide adequate liquidity and credit coverage for the 'A-1'-plus rating on the class A-1 notes. These notes have a legal final maturity of 13 months. Internal credit support for class A-2, A-3, and A-4 notes, which mature sequentially from Oct. 15, 2001 to June 15, 2005, provides FSA with a multiple of expected losses that is consistent with an investment-grade rating.