A revolving pool of dealer floorplan receivables will secure the $1.1 billion issuance of asset-backed securities from the Ford Credit Floorplan Master Owner Trust A, a deal expected to close in about one week.
The transaction has a number of strong characteristics that are expected to bolster its credit outlook, according to Fitch Ratings. For one, monthly payment rates reached record highs over the last couple of years, Fitch said, reaching 71.5% at the end of Q1 2023.
Also, the notes have adequate hard credit enhancement, 24.44%, 19.94%, 15.94% and 12.94% on classes A, B, C and D notes, respectively, providing adequate loss coverage levels over Fitch's base case loss assumptions, the rating agency said.
While several Ford entities are involved in the deal as sponsor, servicer, administrator, and depositor, Computershare Trust Co. will participate as the backup servicer on FCFMOTA 2023-1, according to Fitch.
Barclays Capital is the lead underwriter on the deal, which will issue the notes through a senior-subordinate structure. Notes will pay a spread over the prime rate, although guidance on spreads and pricing was not clear. There is a chance, though, that 2023-1's class A notes could be issued and reference to the 30-day average Secured Overnight Financing Rate (SOFR), according to Fitch.
Compared with other dealer floorplan programs that have come to market since 2019, FCFMOTA 2023-1 has the largest outstanding principal balance, $14.9 billion, and the largest number of accounts, 3,338. The average principal balance outstanding is $4.4 billion.
As for the underlying collateral's characteristics, new cars account for almost the entire pool, at 92.9%, according to Fitch. Geographic diversity helps to shield the collateral pool from rolling recessions and regional economic downturns, according to Fitch, and in this deal Texas, California and Florida accounted for 11.9%, 6.5%, and 6.0% of the collateral pool's principal balance, according to Fitch.
Based on available information, Fitch intends to assign ratings of 'AAA' to the deal's $1 billion, class A notes; 'AA' to the class B notes; 'A' to the class C notes and 'BBB' to the class D notes.
All of the notes have a legal final maturity date of May 15, 2028, according to Fitch.
