Shares of online used car dealer Carvana (NYSE: CVNA) were jumping double digits for the second time this week. This time the catalyst was a credit rating upgrade by S Global on some Carvana-sponsored securitizations. 

As a result, Carvana stock was up 18.3% as of noon ET.

Loan securitization is a key part of Carvana's business model as it tends to sell the auto loans it makes to customers, rather than keeping them on its books. A wave of defaults in auto loans, therefore, could be potentially devastating for Carvana, but the S is saying that, instead, the opposite is happening. It overestimated the losses Carvana and its partners would take on its loans, and is raising its ratings accordingly.

Continue reading

Source Fool.com