OREANDA-NEWS. S&P Global Ratings today assigned its preliminary ratings to First Investors Auto Owner Trust 2016-2's $230 million asset-backed notes (see list).

The note issuance is an asset-backed securities transaction backed by subprime auto loan receivables.

The preliminary ratings are based on information as of Sept. 7, 2016. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.

The preliminary ratings reflect: The availability of approximately 34.9%, 30.6%, 24.2%, 18.8%, and 15.2% credit support for the class A, B, C, D, and E notes, respectively, based on stressed cash flow scenarios (including excess spread). These credit support levels provide approximately 3.65x, 3.15x, 2.45x, 1.85x, and 1.50x coverage of our 9.00%-9.50% expected cumulative net loss range for the class A, B, C, D, and E notes, respectively. The timely interest and principal payments made under stressed cash flow modeling scenarios that are appropriate for the preliminary ratings. Our expectation that under a moderate ('BBB') stress scenario, the ratings on the class A and B notes would not drop by more than one rating category, and the ratings on the class C, D, and E notes would not drop by more than two rating categories within the first year. These potential rating movements are consistent with our rating stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).The collateral characteristics of the pool being securitized, with direct loans accounting for approximately 19% of the cut-off pool. These loans historically have lower losses than the indirect-originated loans. First Investors Financial Services Inc.'s (First Investors') 26-year history of originating and underwriting auto loans, 15-year history of self-servicing auto loans, and 12 years as a third-party servicer, as well as its track record of securitizing auto loans since 2000.First Investors' 13 years of origination static pool data, segmented by direct and indirect loans. Wells Fargo Bank N. A.'s experience as the committed back-up servicer. The transaction's sequential payment structure, which builds credit enhancement based on a percentage of receivables as the pool amortizes.