A pool of revolving auto dealer floorplan credit lines will secure $300 million in asset-backed bonds, where Navistar Financial, the financing subsidiary of Navistar International, will sponsor the deal.
The transaction is called Navistar Financial Dealer Note Master Owner Trust II, Series 2023-1, and is known as NAVMT II, according to analysts from Fitch Ratings. The deal is slated to close on September 20, according to the Asset Securitization Report's deal database.
NAVMT II has a number of attributes that lend themselves to a strong credit outlook, such as strong concentrations of top obligors. The distribution of dealers among the top categories has improved, so that category 'A' dealers account for 87.7% of the wholesale portfolio, and 'B' category dealers account for 10.2%, according to Fitch. Also, the floorplan loans have monthly payment rates that are at record highs.
NAVMT 2023-1 will include a yield supplement interest, a new feature to the platform. What drives the feature is a flexible discount option that allows the issuer to increase the yield on the transaction's underlying dealer notes. It discounts the principal balance and converts the principal to interest.
BofA Securities is the structuring lead manager on the deal, according to Fitch analysts.
About 168 dealer accounts are in the underlying portfolio, with an average principal outstanding balance of $5.8 million. Trucks and buses account for 71.2% and 25.1%, respectively, of the portfolio balance, the rating agency said. Virtually the entire pool, 98.1% is financing new vehicles, according to Fitch.
Fitch expects to assign ratings of 'AAA' to the class A notes, and 'AA' to the class B notes. All of the notes have a legal final maturity of Aug. 25, 2028.
