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Moody's rates DriveTime notes B2
Moody's Investors Service said it assigned DriveTime Automotive Group and DT Acceptance Corp.'s $160 million senior unsecured notes due 2013 a rating of B2.
The outlook is stable.
The notes will replace the company's existing $80 million issue of senior unsecured notes due 2010, with a $1.5 million stub piece in a collateralized debt obligation to remain outstanding.
The rating reflects the company's integrated auto dealer and auto finance franchise for the sub-prime market, its centralized systems and risk management infrastructure, as well as the experience of its owners and management team, its improved credit metrics and core profitability, Moody's said.
The ratings are constrained by the issuer's reliance on confidence-sensitive securitization and other secured funding. DriveTime's liability structure limits its financial flexibility and provides for the effective subordination of the senior unsecured notes, and its business concentration in the sub-prime segment increases its vulnerability to adverse economic developments, the agency said.
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