Ally Financial is marketing $986.60 million of auto-lease backed securities, adding to what has been a busy first quarter for this sector.
Ally Auto Receivables Trust 2015-SN1 is backed by closed-end new vehicle leases on primarily GM and Chrysler brand vehicles, according to a presale report published by Fitch Ratings. The pool consists of strong quality leases with a weighted average FICO score of 759, seasoning of 16 months, and a “reasonably diversified” maturity schedule, per Fitch.
Citibank is the lead underwriter.
The deal follows hard on the heels of a $1 billion offering from GM Financial, which priced this week, and another from Hyundai early in March. Volkswagen also tapped the market for more than $1 billion in February, while Mercedes Benz and BMW issued just over $3 billion, combined, in January.
The Ally trust will issue a $182 million money market tranche and three tranches of notes with a preliminary AAA’ rating from Fitch: $480 million of notes maturing in June 2017, $250 million of notes maturing in December 2017, and $74.6 million of notes maturing in February 2019. All four tranches benefit from initial credit enhancement of 18.75%.
Credit and residual losses on Ally’s portfolio have exhibited stable performance in recent years, according to Fitch. However the rating agency raised the same red flag about the potential for used car prices to rise as it has with other auto loan and lease securitizations. The wholesale vehicle market has been strong in recent years, but the large volume of cars coming off lease is expected to put downward pressure on prices sometime this year. That would limit the amount investors could recover when borrowers stop making payments.