FGA Capital, an Italian captive auto finance company, plans to issue 500 million ($685 million) in securities backed by performing fixed-rate Italian auto loans,according to a DBRS presale report.
The company was established in December 2006 as a joint venture between Fiat Auto S.p.A., later renamed Fiat Group Automobiles S.p.A. and Sofinco S.A., part of the Credit Agricole Group.
The deal , A-Best 9, is backed by auto loan contracts underwritten to private borrowers for both new and used cars. The loans typically require a down payment, are fixed-rate, and payable in equal monthly installments over a tenor of maximum 84 months.
DBRS noted in the presale report that Italian auto loans do not benefit from a pledge over the vehicle, and they are treated as unsecured consumer loans. However the loans tend to achieve “better recovery rates than personal loans.”
The capital structure will offer: 437.5 million of AAA’ rated, class A notes, 22.5 million of A’ rated, class B notes and 15million of BBB’ rated notes offered over two tranches. DBRS will not rate the 25 million class M notes. The senior class A notes will benefit from 12.5% credit enhancement. The notes have a legal final maturity of Dec. 10, 2028
Credit Agricole and UniCredit Bank are the joint lead managers and structuring agents on the deal.