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TMCNet:  Kroll Bond Rating Agency Assigns Preliminary Ratings to Notes Issued by Tidewater Sales Finance Master Trust

[April 10, 2017]

Kroll Bond Rating Agency Assigns Preliminary Ratings to Notes Issued by Tidewater Sales Finance Master Trust

Kroll Bond Rating Agency ("KBRA") assigns preliminary ratings to three classes of notes issued by Tidewater Sales Finance Master Trust, Series 2017-A ("Series 2017-A"). This transaction represents Tidewater Finance Company's ("TFC") first term ABS (News - Alert) issuance collateralized by a pool of retail installment receivables and receivables interests.

TFC is a privately held consumer finance company, established in 1992 to originate and service retail installment contracts to consumers with financial difficulties in the past but currently demonstrate the financial capabilities and willingness to establish new positive credit. TFC is 90% owned by the Sandler family and 10% owned by Nathan Benson, its Chief Executive Officer and Chief Financial Officer. TFC has two main business lines, Tidewater Motor Credit ("TMC (News - Alert)") and Tidewater Credit Services ("TCS").

TCS provides revolving lines of credit and/or installment credit to consumers declined by dealers' primary finance sources. The majority of customers have credit bureau scores ranging between 550 and 700. TCS offers programs to retailers nationwide that specialize in furniture, flooring, heating and cooling systems, general home improvement projects and many other product lines. TFC's programs are currently offered in over 4,181 retailer locations.

TFC is an experienced servicer of subprime consumer receivables and operates collections and servicing in its Virginia Beach, VA office and its Henderson, NV servicing center.

The transaction has initial credit enhancement levels ranging from 29.80% for the Class A notes to 5.72% for the Class D notes. Credit enhancement is comprised of excess collateral amount, subordination of junior note classes, excess spread, and spread account for the benefit of Class C notes. The spread account is 1.0% of the Initial Collateral Amount for the initial payment date and subject to change according to a schedule based on future excess spread performance. Initial and required excess collateral amount is 5.72% as a percentage of the Initial Collateral Amount. If the three-month average excess spread percentage is less than 0.0%, or the three-month average charge-off percentage is greater than 1.75%, or the Free Equity Amount is less than 2.0%, an Early Amortization Event will occur and the revolving period will terminate. During the Early Amortization Period, all available funds will be used to pay principal on the notes sequentially. The Series 2017-A transaction will begin with a revolving period of 18 months and no principal payments to the notes will be made during the time unless an Early Amortization Event occurs. The receivables purchased during the revolving period must comply with certain eligibility criteria, including origination channels, internal risk score, and APR.

KBRA analyzed the transaction using the U.S. Credit Card ABS Rating Methodology published on June 24, 2013. KBRA's credit card methodology incorporates an analysis of: (1) the quality and expected performance of the underlying collateral, (2) the originator's and servicer's business model and operational capabilities and (3) the transaction terms, including capital structure, credit enhancement and legal structure.

In applying the methodology, KBRA analyzed TCS's static pool data and the underlying collateral pool. KBRA also stressed the capital structure based on its stress case cash flow assumptions. KBRA conducted an on-site operational review of TFC at its Virginia Beach, VA headquarters in October 2016. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA's Pre-Sale Report, Tidewater Sales Finance Master Trust Series 2017-A, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Tidewater Sales Finance Master Trust, Series 2017-A



       
Class     Rating     Initial Principal Balance  
A     A (sf)     $51,320,000  
B     BBB (sf)     $9,210,000  
C     BB (sf)     $5,990,000  
D     NR     $2,400,000  
 

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC (News - Alert) Rule 17g-7, to provide a description of a transaction's representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA's disclosure for this transaction can be found in the report entitled Tidewater Sales Finance Master Trust Series 2017-A.

Related Publications: (available at www.kbra.com)

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).


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