CarMax Auto Owner Trust 2026-4 securitization draws expected Fitch ratings

Traders Union
All News
Financial News
CarMax Auto Owner Trust 2026-4 Fitch ratings

Highlights

Fitch expects to assign ratings from F1+(EXP)sf to BBB(EXP)sf for CarMax Auto Owner Trust 2026-4, reflecting improved credit quality versus CAOT 2026-3 and materially better than 2024-2.
The CAOT 2026-4 pool features a weighted average FICO score of 766, a weighted average loan-to-value ratio of 86.17%, 55.73% SUVs, and 2.9% electric vehicles.
Fitch sets its cumulative net loss proxy at 1.55%, with initial hard credit enhancement at 5.50% for class A and expected excess spread of 2.61%.

Expected ratings and collateral profile

As reported by Fitch Ratings, the agency expects to assign ratings and Rating Outlooks to notes issued by CarMax Auto Owner Trust 2026-4, a securitization of retail auto loans originated by CarMax Auto Finance and serviced by CarMax Business Services, LLC, a wholly owned captive finance subsidiary of CarMax, Inc.

The expected ratings range from F1+(EXP)sf on the short-term A-1 notes to AAA(EXP)sf on classes A-2-A, A-2-B, A-3 and A-4, AA(EXP)sf on class B, A(EXP)sf on class C and BBB(EXP)sf on class D. Fitch says the pool shows slightly better credit quality than CAOT 2026-3 and materially better quality than 2024-2, after CarMax revamped its platform.

The trust has a weighted average FICO score of 766, similar to 765 in CAOT 2026-3 and the highest for the platform so far. The weighted average loan-to-value ratio stands at 86.17%, while SUVs account for 55.73% of the pool and electric vehicles make up about 2.9%.

Loss expectations and note protection

Fitch says it uses performance from the 2006-2009 and 2021-2023 vintages to represent through-the-cycle performance, capturing both weaker and stronger periods. The agency expects incremental improvement from higher-quality FICO 650-plus pools and sets a forward-looking rating case cumulative net loss proxy at 1.55%, matching CAOT 2026-3 and CAOT 2026-2 but below earlier deals.

Initial hard credit enhancement totals 5.50% for class A, 3.75% for class B, 1.85% for class C and 0.50% for class D, each slightly above or in line with the prior 2026-3 transaction. Expected excess spread is 2.61%, down from 2.82% at the pricing of CAOT 2026-3, and Fitch says the enhancement is sufficient to absorb its rating case loss assumptions.

Fitch also says CarMax Auto Finance remains a capable originator, underwriter and servicer based on historical delinquencies, losses and securitization results. Its base case loss expectation is 1.25%, while downside risks include higher defaults and weaker recoveries, and stronger-than-expected asset performance could support upgrades for subordinate notes.

Our earlier coverage of Fitch Ratings’ affirmation of British Airways’ 'BBB' issuer default rating with a Stable Outlook explained why the agency views the airline as maintaining an investment-grade credit profile despite volatile fuel costs and intense competition. We noted Fitch’s emphasis on operational performance, cost control, fleet modernization and customer-experience investments, alongside risks from geopolitical tensions and potential travel-demand disruption.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.