Ford Credit Canada has launched its first dealer securitization in four years of dealer inventory financing.
The CAD$460.13 million (US$361.3 million) Floorplan Auto Securitization Trust Series 2017-F1 is backed by a balance of CAD$1.78 billion in loans and advances made to 273 Ford dealers in Canada to purchase new and used auto inventory. Floorplan financing agreements require dealers to pay back loans in full on cars after they are sold; if a vehicle is unsold after a certain period of time, dealers must pay down loan on a pre-determined payment schedule.
The Series 2017-F1 issuance has a 2.5- to three-year revolving period in which accumulated principal can be used for the purchase of additional inventory finance contracts.
The capital structure includes $400 million in class-A notes, which benefit from 24.38% credit enhancement – a level consistent with past transactions as well as mirroring the CE levels of Ford's U.S. floorplan master trust series. Both Moody’s Investors Service and DBRS gave the senior tranches preliminary triple-A ratings.
All notes are expected to be paid in full in July 2020, and have a legal maturity date of July 2022.
Moody’s noted in its presale report that Ford’s dealership base in Canada has performed stronger in comparison to the U.S. dealers network, citing the ability of its Canadian dealers to remain profitable during the financial crisis as an example.
As of March 31, the dealers in the pool had an average account balance of $6.5 million (an average 0.4% concentration of the pool balance for individual dealers).
Headquartered in Edmonton, Ford Credit Canada was established in 1962 to provide financing for Ford and Lincoln vehicles across Canada. It is a subsidiary of Ford Motors, the leading seller of automobiles in Canada this year with 160,288 vehicles sold in the first two quarters.