Ford Motor Credit is sponsoring a new $1.1 billion auto-loan securitization, which could be upsized to more than $1.51 billion, collateralized by a a five-year revolving pool of prime retail contracts.
Ford Credit Auto Owner Trust 2021-REV1 is the first revolving securitization sponsored by the captive finance arm of Ford Motor Co. since last October. Ford also securitizes prime loans through its standard shelf that offers static pools of vehicle loans.
Ford has issued 13 prior revolving transactions, of which eight are still in their revolving periods.
The pool consists of mostly new contracts (a 92.5% concentration) for auto, truck and SUV purchases through Ford-franchised dealerships. While most of the loans are extended-term loans over 60 months, the percentage of 61-84 month loans decreased to 64.7% of the pool from 69.7% is the previous revolving securitization issued by Ford Credit.
Loans between 72 and 84 months remained 8% of the pool, but the weighted average FICO in that band decreased to 727 from 734.
The 2021-REV1 pool has similar credit characteristics to other Ford prime-loan deals, such as a WA FICO of 736 and a lengthy seasoning of the loans (8.6 months).
The transaction features four classes of notes, including a $1 billion (or up to $1.5 billion if upsized) senior Class A tranche supported by an initial 9.5% credit enhancement as well as excess spread that is to be determined.
Fitch Ratings and S&P Global Ratings have assigned preliminary AAA ratings to the Class A tranche.
The capital stack also includes the first Class D subordinate tranche for a FordREV shelf transaction.
Fitch’s base-case credit loss proxy on the deal is 2.55%. S&P’s expected losses are between 3% and 2.6%.
BofA Securities is the lead underwriter.
