BMW is adding another $1 billion to the mix of auto-related securitizations in the new issue market.
The deal, BMW Vehicle Lease Trust 2016-2, is backed by leases to prime quality borrowers, according to Standard & Poor’s. It will issue four senior tranches that benefit from initial credit enhancement of 15.9%: $120 million money market tranche is rated ‘A-1,’ and three term tranches rated ‘AAA’: $440 million of notes maturing in January 2019, $350 million maturing in September 2019, and $90 million maturing in February 2020.
Collateral for the bonds is comprised of monthly lease payments and base residual values of a pool of lease contracts originated by BMW dealers.
Credit Suisse Securities, Mizuho Securities, and SG Americas Securities are the underwriters.
Similar to BMW' previous auto lease securitizations, the transaction includes a nonamortizing reserve account and initial overcollateralization with target levels that are nonamortizing and will step down only after the class A-2 notes are paid in full. Note principal will be paid sequentially.
Compared with the collateral backing BWM’s previous auto lease securitization, completed in February, the weighted-average seasoning of leases in this deal has decreased, to 9.6 months from 11.0 months.
The top three model concentration by vehicles series (3 Series, 4 Series, and 5 Series), as a percentage of the initial aggregate securitization value, also decreased, to approximately 58% from 61%. This deal includes a new vehicle model, X4, which represents 2.7% of the initial aggregate securitization value.