Hyundai Auto Receivables Trust 2023-C

Hyundai Auto Receivables Trust 2023-C Summary

Hey there! Think of this as our chat about Hyundai Auto Receivables Trust 2023-C. We're going to break down what they do, how they've been doing, and what it might mean for you as an investor. No fancy finance talk, just plain English.

First, understand that Hyundai Auto Receivables Trust 2023-C is not a regular company. You cannot buy its stock. It's a special financial entity called an "Asset-Backed Security (ABS) Trust." Think of it as a special bank account holding many auto loans. This trust sells "notes" (like bonds) to investors. These notes are repaid with money from car loan payments. So, "investment" here means buying these notes, not company stock.

This report covers the fiscal year that ended on December 31, 2025.

1. What does this trust do and how did it perform this year? This trust is basically a pool of auto loans. Hyundai Capital America ("Sponsor" and "Servicer") creates these car loans. They then sell them to Hyundai ABS Funding, LLC ("Depositor"). This company then transfers the loans into this trust. The trust then sells notes to investors. Loan payments from car buyers repay these investors.

For a trust like this, "performance" isn't about profit. It's about how well the auto loans perform. Are people paying them back on time? Is the operation running smoothly?

Good news on operations: Hyundai Capital America manages these loans. They formally checked their compliance with SEC rules called "Regulation AB Servicing Criteria." This was for the year ending December 31, 2025. These rules are the SEC's guide for handling securitized assets. They cover payment processing, account upkeep, default management, and reporting. This ensures consistent, reliable cash flow from the auto loans. Charley Yoon, their Treasurer, signed an Annual Servicer's Compliance Certificate. It covers January 1 to December 31, 2025. He stated that, after review, the Servicer met all key obligations. This means they followed the rules for managing the loans. They also ensure vendors meet these standards. An independent accounting firm, Baker Tilly US, LLP, confirmed this. Their report states Hyundai Capital America's compliance assertion is "fairly stated in all important ways." This means an independent expert agrees. Hyundai Capital America manages loans properly across all their auto loan trusts (their "Platform"). This includes vendor activities.

More good news on operations: Citibank, N.A. acts as the trustee and paying agent. This means they hold assets and handle investor payments. Citibank also assessed its own compliance. For the same period, their management confirmed they met all relevant SEC servicing criteria for their duties. KPMG LLP, another independent accounting firm, reviewed this assessment. This dual confirmation from both the loan manager (Servicer) and asset holder (Trustee) is important. Each had independent auditor reviews. This provides strong assurance that the trust's operations are running smoothly and compliantly.

2. Major wins this year

• Smooth Operations & Strong Compliance: This report confirms a big win. Multiple key players formally checked their compliance with strict SEC rules. These "Regulation AB Servicing Criteria" apply for the year ending December 31, 2025.
  • Hyundai Capital America (the Servicer) certified compliance: As the loan manager, their Treasurer, Charley Yoon, signed an Annual Servicer's Compliance Certificate. It states Hyundai Capital America met all key obligations. This means daily handling of your investment, like collecting payments, is done correctly. An independent accounting firm, Baker Tilly US, LLP, confirmed this. They found Hyundai Capital America's compliance assertion "fairly stated in all important ways." This applies across all their auto loan trusts ("Platform").
  • Citibank, N.A. (Trustee and Paying Agent) also complied: Citibank holds assets and handles investor payments. Their management confirmed meeting all relevant SEC servicing criteria for their duties. KPMG LLP, an independent accounting firm, reviewed this. This dual confirmation from both the loan manager and asset holder is strong. It assures smooth, compliant trust operations.
• No Major Legal Troubles: The report states no significant lawsuits or legal issues. These would not importantly affect investors holding the notes. This applies to the trust or its key players.

3. Key risks for note investors This trust has no "stock," so no "stock price" risk. However, investors holding its notes face risks. Generally, risks for noteholders in an auto loan trust include:

• Borrowers not paying (Credit Risk): Many car buyers might miss loan payments. This leads to late payments and defaults. If this happens, the money from auto loans might not cover payments to noteholders. This is the main risk for investors in these securities.
• Economic downturns: A weak economy, with more job losses or less spending, increases credit risk. More borrowers may struggle financially. This leads to more late payments and defaults. This hurts the trust's ability to pay noteholders.
• Interest rate changes: Fixed interest payments on existing notes are generally stable. But rising market interest rates can lower the market value of these notes. They become less attractive than newer, higher-paying investments. If interest rates drop significantly, it creates prepayment risk. Borrowers might refinance their auto loans at lower rates. This means the trust repays noteholders' principal sooner than expected. Investors then must reinvest their money at potentially lower rates, reducing their overall return.
• Servicer Performance Risk: This year's compliance reports were positive. Still, Hyundai Capital America's ongoing performance as Servicer is vital. Future operational problems, poor collections, or not following standards could hurt cash flow from auto loans. This would then affect payments to noteholders.

4. Competitive positioning This concept doesn't really apply to an auto receivables trust. It's not a company competing for market share or customers. Its "success" is tied to the performance of the auto loans it holds.