KBRA assigns preliminary ratings to two classes of notes issued by Santander Drive Auto Receivables Trust 2024-S2 ("SDART 2024-S2"), a re-securitization of a portion of the Class D notes (the "Underlying Class D Notes") and the entire certificate (the "Underlying Certificate") issued from the Santander Drive Auto Receivables Trust 2021-1 auto loan transaction ("SDART 2021-1" or the "Underlying Securitization Transaction").

The SDART 2024-S2 Class DX Notes are collateralized by the overcollateralization and cash reserve account representing 16.06% of the Underlying Class D Notes, which will be transferred from Santander Consumer to the Seller and from the Seller to the Issuer on the closing date. As of October 9, 2024, the SDART 2021-1 Class D Notes are the senior most class outstanding and are currently receiving principal payments. The SDART 2021-1 Class D Notes have 84.62% enhancement which consists of $65,701,786 of auto loan receivables representing the difference between the SDART 2021-1 remaining collateral balance of $309,295,745 less the SDART 2021-1 Class D and Class E notes outstanding of $243,593,959 (the “Underlying Overcollateralization Amount”), subordination of the SDART 2021-1 Class E notes and amounts available in the SDART 2021-1 Reserve Fund (the “Underlying Reserve Account Balance”) as a percentage of the remaining collateral balance. The reserve account balance is equal to 1.0% of the SDART 2021-1 initial pool balance which is currently $33,225,733. Overcollateralization and the reserve account are at their targeted levels and total $98,927,519, with the Underlying Certificate receiving excess proceeds. The Class DX Notes have a rating of K-1+ (sf), KBRA’s highest short-term credit rating, and are expected to be paid in full in less than 13 months.

The SDART 2024-S2 Class R1 Notes are collateralized by the Underlying Certificate. The Underlying Certificate represents the residual interest in SDART 2021-1 and is backed by the Underlying Overcollateralization Amount, the Underlying Reserve Account Balance, and the SDART 2024-2 Reserve Account. As of October 9, 2024, the Class R1 Notes have 14.44% enhancement which consists of the overcollateralization of the Class R1, which is the difference between the balance of the overcollateralization and the reserve account of the underlying transaction (the Underlying Certificate) of $98,927,519 and the Class R1 and Class RR notes outstanding ($84,848,836) equal to $14,078,683 plus the SDART 2024-S2 reserve account over the Underlying Certificate.

SDART 2024-S2 will issue three classes of notes that are collateralized with cash flows from the Underlying Class D Notes and the Underlying Certificate. The collateral for SDART 2021-1 is a pool of mostly subprime automobile installment contracts. As of August 31, 2024, the auto receivables had an average current principal balance of $23,996, weighted average (WA) interest rate of 14.26%, and WA original and remaining term of 72 and 28 months, respectively and were made to obligors with a WA FICO score of 569. The new/used vehicle mix is 34% and 66% of the collateral balance, respectively.

SC was founded in 1981 in the state of Illinois and is a wholly owned subsidiary of Santander Holdings USA, Inc. (“SHUSA”). SHUSA is a wholly owned direct subsidiary of Banco Santander, S.A. (“Santander”). Headquartered in Dallas, Texas, with over 5,000 employees, SC originates prime and near-prime automobile receivables primarily by purchasing automobile installment sale contracts from dealers under a dealer agreement, which includes guidelines and procedures of the purchasing and origination process. SC also originates its auto receivables through its direct lending platform whereby applications are submitted to SC electronically and through its pass-through arrangements with third parties which direct applications to SC. In addition to its these programs, SC is a finance provider for FCA US LLC (“Stellantis”) since 2013, and in April 2022, extended the agreement through 2025. In June 2022, SC partnered with Mitsubishi Motors North America, Inc. in a preferred lender program for consumer auto loans, auto leases and dealer loans.

KBRA applied its Auto Loan ABS Global Rating Methodology, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and SC’s historical default and recovery data. KBRA considered its operational review of SC as well as periodic update calls with the Company. Operative agreements and legal opinions will be reviewed prior to closing.

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Methodologies

• ABS: Auto Loan ABS Global Rating Methodology
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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