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European Primary Driven by Auto ABS Deals

Moody's Investors Service assigned ratings to the cash securitization of auto loans issued by Spanish bank Santander.

The deal, dubbed FTA Santander Consumer Spain Auto 2010-1, has €493.5 ($620.5 million) A notes rated 'Aaa', which priced at 70 basis points over the three-month Euribor.

The €57 million B notes, rated 'Aa2', priced at 120 basis points over the three-month Euribor. The €49.5 million C notes, rated 'Baa2', priced at 150 basis points over the three-month Euribor. The transaction's €88.5 million D notes were rated 'Ca.'

The Santander Spanish auto deal follows a number of European auto ABS transactions that have come to market over the past weeks.

Ford Motor Co.’s FCE Bank recently announced that it had funded €474 million of in the market via its €502.75 million Globaldrive 2010-A.

The structure offered €474.45 million, 2.2-year triple-A rated notes that priced at 160 basis points over one-month Euribor.

The single-A rated €28.8 million 3.7-year class B notes priced at 250 basis points over one-month Euribor. Meanwhile, the unrated €26.786 million class C notes were both retained.

Renault also brought a €1 billion deal to market via its RCI Banque. The deal, which is backed by German car loans, is called Cars Alliance Auto Loans Germany 2010-1. It has on offer a triple-A rated, €873 million A class notes with a 1.78-year WAL.

In terms of the Santander deal, it is backed by a portfolio of 60,556 auto loans, extended to individuals (96.3%) and small companies (3.7%), to finance the acquisition of new (90.5%) and used cars (9.5%).

The loans were originated between 2004 and 2010 and have a weighted average seasoning of less than a year and a weighted average remaining life of 4.84 years.

Moody's said that it benefits from several credit strengths, such as a very granular portfolio, a static structure and a swap agreement guaranteeing an excess spread of 2.5% which Moody's took into consideration in its analysis.

However, the rating agency noted that the transaction features a number of credit weaknesses, including a relatively short weighted average seasoning, the performance deterioration above market average of previous deals originated by Santander Consumer as well as the originator/servicer not being rated by Moody's.

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