Ally Bank is returning to the capital markets to sponsor a $1.1 billion securitization of lease payments from auto loans extended to prime borrowers.
The Ally Auto Receivables Trust is preparing to issue seven tranches of class A, B, C and D fixed-rate notes, where the super senior tranches, A1 through A4, issue the vast bulk of the auto asset-backed securities (ABS), according to analysts at S&P Global Ratings and Fitch Ratings.
The classes A1, through A4 have legal final maturity dates ranging from March 15, 2027 through June 15, 2031, S&P said. Subordinate classes B, C and D mature on Oct. 15, 2031, Nov. 15, 2031 and Feb. 15, 2034.
Compared with the AART 2025-1 transaction, Fitch noted a slight drift toward a tighter FICO score range of 700-800, from below 700 and higher than 800, the rating agency said. Also, the pool maintains a high concentration of 60-plus month contracts, or extended-term, accounting for 80% of the pool, the rating agency said.
Borrowers are financing mostly used cars, around 60%, another stable characteristic from AART 2025-1.
Loans have an average principal balance of $18,728, with an APR of 9.10% on a weighted average basis.
Although many credit drivers are stable, agencies are being vigilant about several macroeconomic factors that might destabilize borrowers' ability to keep servicing their auto loan debt. One is student loan debt, S&P said.
The Education Department has been notifying student loan borrowers that proceeds from federal income tax refunds and federal benefits, including social security, could be withheld to repay outstanding student loan balances. That could force borrowers to start prioritizing student loan debt over their car payments.
Fitch assigns ratings of F1+ to the A1 notes; AAA to the A2 through A4 notes; and AA+, A+ and BBB+ to classes B, C and D, respectively. S&P assigns A1+ to the A notes; AAA to the A2 through A4 notes; and AA+, AA, and AA- to classes B, C and D, respectively.
