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.

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