Corporate Finance

Consumer Portfolio Services Reports 2026-C Receivables Securitization

Consumer Portfolio Services disclosed a July 22 transaction involving the sale of subprime automotive receivables to CPS Auto Receivables Trust 2026-C and the trust’s issuance of asset-backed notes.

By Carter Hayes ·

Key takeaways

  • Consumer Portfolio Services and its wholly owned subsidiary completed agreements on July 22, 2026, involving approximately $734.51 million of subprime automotive receivables.
  • CPS Auto Receivables Trust 2026-C issued $716.88 million of asset-backed notes in five classes.
  • The notes have fixed interest rates, and the trust is required to make monthly principal and interest payments.
  • CPS will service the receivables; the transaction’s stated credit enhancement includes a reserve account and overcollateralization.

Transaction transfers receivables to a trust

Consumer Portfolio Services, Inc. disclosed in a Form 8-K that it and its wholly owned subsidiary, CPS Receivables Five LLC, entered into a series of agreements on July 22, 2026. Under those agreements, the subsidiary purchased subprime automotive receivables from CPS and sold them to CPS Auto Receivables Trust 2026-C.

The receivables had an aggregate balance of approximately $734.51 million. The trust deposited the receivables with Computershare Trust Company, N.A., as trustee of a grantor trust, and received a certificate representing beneficial ownership of the receivables.

The filing states that the notes are obligations only of the trust, but are treated as long-term debt obligations of CPS. It also states that the sale and issuance of the notes are treated as secured financings for accounting and tax purposes and as sales for legal and bankruptcy purposes.

Trust issues five classes of notes

The trust issued and sold $716.88 million of asset-backed notes in five classes. The filing lists fixed interest rates of 4.52% for Class A, 4.84% for Class B, 5.05% for Class C, 5.72% for Class D and 7.65% for Class E.

The trust is required to pay principal and interest on the notes monthly. Interest is payable on the outstanding principal balance of each class, while principal payments are determined by reference to the receivables’ aggregate principal balance, including adjustments for chargeoffs and prepayments and required overcollateralization.

CPS will act as servicer of the receivables. Computershare Trust Company, N.A. will act as collateral agent and trustee for the secured parties and as backup servicer.

Filing describes collateral and credit enhancement

The receivables and related payment rights secure repayment of the notes. The filing identifies overcollateralization and the reserve account as credit enhancement for the notes, with the reserve account funded by a cash deposit equal to 1.00% of the receivables’ aggregate balance.

Initial overcollateralization is 2.40%. The filing also provides for accelerated principal payments to reach a specified final overcollateralization level.

According to the filing, assets of the trust and subsidiary are not available to other creditors of CPS or its affiliates. CPS has an option to purchase the trust estate at fair market value once the receivables’ aggregate outstanding principal balance is below 10% of its initial aggregate balance, subject to the stated conditions for redeeming the notes and meeting other trust obligations.