Italian car giant Fiat recently brought to market the largest ever European securitization of auto loans. Called First Italian Auto Transaction, the E965 million ($917 million) deal was structured by Euro Capital Structures, the Dublin-based joint venture that was set up by Fiat and Italian bank Unicredito Italiano in May 1999. Merrill Lynch, Schroder Salomon Smith Barney and Unicredito were brought in to underwrite the deal.
The deal is backed by more than 350,000 loans originated to Italian customers by SAVA, Fiat's wholly owned car financing company that has a 25% share of the Italian autoloans market. The total value of the loans at the time of launch was just under E1.1 billion.
Credit enhancement of 11% comes in the form of subordination on the unrated E119.3 million M notes - which will be retained by Fiat - as well as a liquidity reserve that amounts to 2% of the transaction.
The E965 million A tranche was rated Aaa by Moody's Investors Service and AAA by Standard & Poor's and Fitch . The notes, which carry a five year expected maturity, have an average life of 3.8 years and priced at 28 basis points over three-month Euribor.
Despite talk in the market that Fiat was looking for slightly tighter pricing, Chris Brown, an official at ECS who worked on the deal, said that the company were pleased. "Generally, the client was very happy with it, and we were certainly happy with how the transaction went," he said. "The pricing was where we wanted it to be, and seeing as it was Fiat's first European [autoloan] deal, and the biggest in this asset class, it was more a question of if there would be enough investor appetite to get it done. But it was fully subscribed, and Fiat will certainly be looking to do more deals in the future."
Brown said that there was strong interest from Italian and U.K. investors, as well as some take up in the Benelux region, Ireland, Germany and Spain.
Aside from Fiat's use of ECS for structuring deals, Brown added that the company expects to do deals for other companies as well. "We've been mandated to do a leasing deal for another Italian company," he said. "And we'll be looking to do other deals for Fiat and Unicredito, our parent bank, as well."