IRVINE, Calif. — On Monday, Consumer Portfolio Services announced the closing of its first rated-term securitization in more than two years.

The transaction represents the company's first senior subordinate securitization since 1993, according to management.

In the transaction, qualified institutional buyers purchased $85.352 million of investment grade notes backed by auto receivables purchased by CPS and its subsidiary, The Finance Co., primarily in 2008.

These receivables were originally financed in September 2008 through CPS's non-consolidated subsidiary, Auto Loan Trust, in which an institutional investor purchased 95 percent of the issued notes and the company retained the remaining 5 percent. Auto Loan Trust was terminated with this transaction, management noted.

"This transaction is a significant milestone for us because it demonstrates our ability to access today's securitization market," explained Charles Bradley Jr., chairman and chief executive officer. "A lower cost of funds going forward, together with continued growth in our new-contract purchases, should pave our way back to profitability."

The sold notes, issued by CPS Auto Receivables Trust 2010-A consist of two classes. Ratings of the notes were provided by Standard & Poor's and were based on the structure of the transaction, the historical performance of similar receivables and CPS's experience as a servicer.

The details include:

Note Class: A

Amount: $77.050 million

Interest Rate: 2.89 percent

Average Life: 1.03 years

Price 99.99366 percent

S&P Rating: A

Note Class: B

Amount: $8.302 million

Interest Rate: 5.68 percent

Average Life: 1.25 years

Price: 99.99752 percent

S&P Rating: BBB

The weighted average effective coupon on the notes is approximately 3.21 percent, management pointed out.

The 2010-A transaction has initial credit enhancement consisting of a cash deposit equal to 1 percent of the original receivable pool balance, subordinated interests of 5 percent and overcollateralization of 12.75 percent. The final enhancement level requires accelerated payment of principal on the notes to reach overcollateralization of 23 percent of the then-outstanding receivable pool balance.

Officials concluded by noting that the transaction was a private offering of securities and was not registered under the Securities Act of 1933, or any state securities law. The securities have been sold, with the company simply reporting the sale as a matter of record.