RICHMOND, Va. — CarMax announced today that it has completed a private placement securitization.

More specifically, the securitization is a private placement of $490 million principal amount of CarMax Auto Owner Trust 2009-A Asset-Backed Notes. J.P. Morgan Securities Inc. acted as adviser on the transaction.

In the transaction, investors purchased $490 million of notes backed by auto loan receivables originated by CarMax Auto Finance. The ratings of the notes were provided by Standard & Poor's and Fitch.

The Class A-1 notes and A-2 notes, which totaled $406.2 million, were eligible collateral under the Federal Reserve Bank of New York's Term Asset-Backed Securities Loan Facility, otherwise known as TALF.

 

 

 

 

Initial

 

 

Interest Rate

 

 

Weighted

 

 

Ratings

 

 

Class

 

 

Principal Amount

 

 

Per Annum

 

 

Average Life

 

 

S & P

 

 

Fitch

 

 

A-1 Notes

 

 

$287,000,000

 

 

 

2.00%

 

 

0.99 years

 

 

AAA

 

 

AAA

 

 

A-2 Notes

 

 

119,230,000

 

 

 

3.73%

 

 

2.71 years

 

 

AAA

 

 

AAA

 

 

B Notes

 

 

67,510,000

 

 

 

9.45%

 

 

3.77 years

 

 

A

 

 

Not rated

 

 

C Notes

 

 

16,260,000

 

 

 

9.45%

 

 

3.92 years

 

 

BBB

 

 

Not rated

 

 

Overcollat.

 

 

10,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$500,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Class B notes were sold at a discount of 6.61 percent, resulting in net proceeds to CarMax of $63 million, officials reported. The Class C notes were sold at a discount of 14.61 percent, resulting in net proceeds to CarMax of $13.9 million, they added.

Credit enhancement includes a reserve account, overcollateralization and the subordination of the Class B notes and the Class C notes.

The initial reserve account balance is $2.5 million, which is 0.5 percent of the aggregate initial outstanding principal balance of the auto loan receivables, the company indicated.

The structure of the transaction is designed to apply certain excess collections on the auto loans receivable to increase over time the reserve account balance to a required amount of $5 million, which is 1.0 percent of the aggregate initial outstanding principal balance of the auto loan receivables.

The initial amount of overcollateralization is $10.0 million, representing 2 percent of the aggregate initial outstanding principal balance of the auto loan receivables.

The structure of the transaction is designed to apply certain excess collections on the auto loan receivables to additional principal payments on the notes so that the amount of overcollateralization increases over time to a target amount equal to the greater of (a) 3.50 percent of the currently outstanding principal balance of the auto loan receivables or (b) 0.50 percent of the initial outstanding principal balance of the auto loan receivables.

If certain performance tests with respect to cumulative net losses on the auto loan receivables are met, the percentages in clauses (a) and (b) above will be reduced.

Officials said the notes were sold without registration under the Securities Act of 1933, as amended, or any state securities laws in reliance upon one or more exemptions from the registration requirements of the Securities Act and the state securities laws.

The notes may not be offered or sold absent registration or an exemption from the registration requirements of the Securities Act and applicable state laws, the company said.

When reporting overall first-quarter results, CarMax officials said their financing arm posted a loss of $21.6 million compared with a profit of $9.8 million turned in during the first quarter of the previous fiscal year.

"Based on conditions in the credit markets, we anticipate that the warehouse facility funding costs and credit enhancement levels will increase upon its renewal or replacement in July, after which they will more closely align with the current funding costs and enhancement levels in the public securitization market," executives said in late June. 

"We reflected these estimated higher warehouse costs and enhancements in the gain recognized on all loans originated and sold in the first quarter of fiscal 2010," they continued at that time.