BMW Financial Services (BMW FS) is marketing $833.9 million of securities backed by receivables collected from lines of credit it makes to retail automotive dealerships.
The deal has been assigned preliminary ratings from Fitch Ratings and Standard & Poor’s.
The transaction, called BMW Floorplan Master Owner Trust (BMWFT) 2015-1, offers $800 million of class A floating-rate notes that are rated AAA’ by both Fitch and S&P. The senior notes benefit from 16.52% credit enhancement, and are due July 15, 2020.
There is also a $33.94 million unrated tranche of class B notes that are non-interest bearing and will be retained by BMW FS. The subordinate notes benefit from 12.97% credit enhancement.
Auto floorplan financing allows dealers to finance their inventory; the line is paid back as new and used vehicles are sold.
Barclays and Citibank have joint leads on the deal; Deutsche Bank is serving as a co-manager.
Fitch attributes the high investment grade rating to the good quality of the receivables, which consists of 85% new vehicles. Both Fitch and S&P cite sufficient credit support as a key strength of the deal as well.
S&P also notes that BMW FS has a high corporate credit rating of A+’ with a stable outlook.
The latest deal is the second series issued from the trust since 2012-1; S&P cites the decrease in credit enhancement for the class A notes to 16.52% from 19.26% for series 2012-1 as a key difference between the series. The payment rate has also trended downwards compared to the previous transaction, however, it has remained above 50% and losses have remained at 0%.
The deal is expected to price tomorrow and settle July 22.