Prime auto ABS activity this week included two transactions exceeding $1 billion in issuance: a vehicle lease transaction from BMW Financial Services and the issuance of a securitized, extended note from Toyota Motor Credit Co.
BMW is seeking to price a $1.45 billion bond package backed by closed-end, retail auto lease contracts underwritten by the captive-finance lender for U.S. BMW auto dealers. The pool for BMW Vehicle Least Trust 2021-1 includes the highest-ever weighted average FICO score (792) for a BMW securitization, according to Moody’s Investors Service.
The transaction has four tranches of senior notes, including a $190 million money-market tranche carrying the highest short term ratings from Moody’s (P-1) and S&P Global Ratings (A-1+).
Moody’s and S&P assigned preliminary triple-A ratings to a $465 million Class A-2 tranche due March 2023; a $465 million Class A-3 tranche due January 2024; and a $130 million Class A-4 tranche due July 2024.
BMW’s deal represents the fifth auto-lease ABS transaction this year, following those by GM Finance,
Mizuho Securities is the lead underwriter.
Toyota Financial Services is issuing its third transaction from auto-loan extended note program that will be backed by retail auto sales contracts. The securitized loan will have a five-year revolving period, which Moody’s considers a potential credit challenge, along with the inclusion of up to 84-month term loans and the uncertainty of future used-vehicle sales prices that could impact recoveries of defaulted assets.
Toyota plans to offer either $1.5 billion in notes, or potentially upsized to $2.25 billion, depending on market conditions.
Moody’s has issued a provisional Aaa rating to the single Class A note offering, which is supported by 7.23% hard credit enhancement. S&P Global has assigned its AAA rating, as well.
