Dechert Leads in Credit Union Auto Loan-Backed Securities Market as Deal Activity Rises

Dechert continues its pioneering role in driving increased involvement among credit unions in the automobile loan-backed securities space, serving as underwriters’ counsel on the sale by credit unions of more than US$1.3 billion in automotive ABS in 2023.

This year alone, Dechert has represented underwriters on five separate offerings by credit unions of automobile loan-backed securities, including the following transactions:

•   Citigroup Global Markets, Inc. and Wells Fargo Securities, LLC made an offering of US$305,860,000 in automobile loan-backed securities by Valley Strong Credit Union, which closed on October 17, 2023. This transaction was further backed by a pool of automobile loans acquired by the Bakersfield, CA-based Valley Strong from Exeter Finance LLC.
•   Stifel Financial Corp. and BofA Securities, Inc. made four such offerings, representing second forays into the market by GTE Financial Credit Union (GTE) and Oregon Community Credit Union (OCCU) and first-time issuances by Veridian Credit Union (Veridian) and General Electric Credit Union (GECU).

Dechert has now played a lead role in all nine credit union auto loan ABS offerings that have priced thus far, representing the underwriters in earlier deals carried out by GTE Financial Credit Union in 2019, Unify Financial Credit Union in 2021, and both Pentagon Federal Credit Union and OCCU in 2022.

The significant increase in credit union offerings this year highlights continued growth in interest among credit unions, which account for almost one-third of all auto loan originations in the United States, in diversifying liquidity and funding options through securitization.

The Dechert team included global finance partner Andrew Pontano, counsel Joshua Strathman and Meghan Redding, associate Bob Frink, and tax partner William Cejudo.

About Dechert

Dechert is a global law firm that advises asset managers, financial institutions and corporations on issues critical to managing their business and their capital – from high-stakes litigation to complex transactions and regulatory matters. We answer questions that seem unsolvable, develop deal structures that are new to the market and protect clients’ rights in extreme situations. Our 1,000+ lawyers across 21 offices globally focus on the financial services, private equity, private credit, real estate, life sciences and technology sectors.