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BMO launches debut $529m auto-loan ABS in U.S.

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Bank of Montreal’s debut US$529.1 million auto loan securization adds to a growing list of cross-border asset-backed transactions involving Canadian vehicle loans, leases and dealer-floorplan financing.

The Canadian Pacer Auto Receivables Trust 2017-1 deal involves the first-ever pooling of new and used auto-loan originations by BMO — for either Canadian or U.S. investors — and is the fifth auto-related asset class emanating from the Great White North this year.

Bank of Nova Scotia (Scotiabank) has already issued two deals totaling $1.5 million through its one-year-old Securitized Term Auto Securitization Trust platform, the latest of which occurred in late September.

Ford Credit Canada has also sponsored a pair of transactions. Ford Floorplan Auto Securitization Trust Series 2017-F1 was a US$522.9 million transaction in July pooling Canadian dealer inventory financing, following April’s issuance of $540.7 million in U.S.-dollar denominated notes in a private placement backed by retail auto loans (Ford Auto Securitization Trust 2017-R2).

On Monday, General Motors Financial of Canada filed for a lease-backed transaction through its GMF Canada Leasing Trust. It would be the second offering from the trust since it launched last year with a Canadian-dollar denominated deal valued at CAN$426 million (approximately US$327 million in October 2016).

BMO already issues asset-backed deals in the U.S. market for its credit card receivables.

BMO’s Pacer transaction involves a senior-note capital structure of a US$110 million money-market tranche (with a provisional P-1 Moody’s Investors Service rating) and three Aaa-rated term tranches.

The Class A-2a and A-2b series of notes will be split between fixed- and floating-rate tranches totaling $202 million; the Class A-3 notes due 2021 totaling $136 million, and the five-year Class A-4 bonds are $52 million, according to a presale report from Moody’s.

An additional offering of subordinate Class B and C notes adding up to $29.1 million are unrated.

The portfolio consists of 42,258 receivables accounts from loans with a total amount due equaling US$654.4 million, according to a presale report from Moody’s. The loans were indirect originations through 3,500 dealer partners for BMO across Canada.

More than 66% of the loans were for used vehicles, a higher-than-average share against other recent Canadian ABS auto-loan transactions in which an average of 70% of the pools involved new vehicles. The average term length for the BMO loans is 64 months, below that of peer issuers.

The loans are to prime customers with average FICOs of 752 and average APRs of 4.73%, according to Moody's.

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Auto ABS Securitization Bank of Montreal