The share of longer-term loans in the underlying pool has increased in Fifth Third’s latest auto loan securitization, according to Fitch Ratings.

The issuer is marketing $1 billion of securities backed by auto loans; its third transaction so far this year. Over 77% of the pool consists of loans with maturities beyond five years, compared to 73% in the 2014-2 series and 71% in the 2014-1 series.

Loans with terms of 67–72 months account for 33.3% of the collateral in 2014-3. Loans with terms of 73-75 months make up a slightly larger 34.8%. Loans with longer terms may be used by borrowers to lower their monthly payments or buy higher priced vehicles.

Longer-term loans may perform worse as a result of higher loss severity, because amortization trails depreciation more than in shorter-term loans.

The issuer’s 2014-3 series will offer $340 million of class A notes that will be a mix of fixed and floating rate notes with a maturity date of May 2017.

An additional $340 million of 'AAA' fixed-rate notes due March 2019 will be sold and $102 million of ‘AAA’ rated class A -4 notes due May 2021 are also on offer. The notes have credit enhancement at 4.25%.

Barclays, Credit Suisse, Deutsche Bank and Wells Fargo Securities are the lead underwriters on the deal.


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