Fitch Upgrades PenFed Auto Loan Securitizations Due to Strong Performance

Fitch Global Ratings upgraded ratings on one class and affirmed ratings on three classes in PenFed Auto Receivables Owner Trust 2022-A.

TYSONS, Va., May 14, 2025 /PRNewswire/ -- PenFed Credit Union, one of the nation's largest federal credit unions, received notable upgrades from Fitch on the ratings of the bonds issued through its inaugural prime auto loan securitization offering PenFed Auto Receivables Owner Trust 2022-A (PNFED 2022-A) due to strong performance.

The affirmations and upgrade of the outstanding notes reflect available credit enhancement (CE) and loss performance to date. Overall, cumulative net losses (CNL) are tracking inside the initial rating case proxy, and hard CE levels have grown for all classes since close. The Stable Outlooks on the 'AAA' rated classes reflect Fitch's expectation that the classes have sufficient levels of credit protection to withstand potential deterioration in credit quality of the portfolio in stress scenarios and that loss coverage will continue to increase as the transaction amortizes.

As of the March 2025 report date, 60+ day delinquencies total 0.24% of the remaining collateral balance and the CNL was 0.29%, tracking well below the initial rating case proxy. Hard CE (of the current adjusted pool balance) has increased for all classes since close. Fitch has also affirmed the "AAA" rating on the current outstanding A-4, B and C tranches and upgraded the D tranche to "AAA" from their current rating of "AA". Currently all the tranches that are outstanding in this transaction have a "AAA" rating from Fitch.

Fitch maintained conservative assumptions in deriving the rating case proxy while also acknowledging the strong recent performance. The rating case proxy was derived by projections based on current performance and is currently 0.60%. Given the current economic environment, Fitch deemed it appropriately conservative to utilize this approach for the transaction.

Conversely, the base case proxy, which does not include a margin of safety, was increased from 0.30% to 0.40%, considering the current macroeconomic environment. Cash flow modelling produced multiples in excess of the 5.0x multiples for 'AAAs' for each class. Fitch's full rating action commentary can be found here.

PenFed's August 2022 transaction issued $460,292,000 of fixed-rate, amortizing asset-backed notes backed by prime auto loans. The securitization is a private placement offering, which in the United States is offered only to qualified institutional buyers under Rule 144A. The asset-backed notes were offered in four senior and three subordinate tranches of notes and rated by S&P and Fitch.

PenFed has the second-largest consumer loan portfolio among all credit unions across auto, personal, student, consumer loans and credit cards. PenFed also possesses one of the largest auto loan portfolios among federal credit unions, with originations across all 50 states and Puerto Rico.

About PenFed Credit Union
Established in 1935, Pentagon Federal Credit Union (PenFed) is one of America's largest federal credit unions, serving nearly 3 million members worldwide with $31 billion in assets. PenFed Credit Union offers market-leading certificates, checking, credit cards, personal loans, mortgages, auto loans, student loans, and a wide range of other financial services with members' interests always in mind. PenFed Credit Union is federally insured by the NCUA and is an Equal Housing Lender. To learn more about PenFed Credit Union, visit PenFed.org, like us on Facebook and follow us @PenFed on X. Interested in working for PenFed? Check us out on LinkedIn. We are proud to be an Equal Employment Opportunity Employer.

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SOURCE PenFed Credit Union