Ford Motor Credit is offering its fifth dealer floorplan securitization of the year, marketing $862.75 million in bonds that back lines of credit provided by the captive finance company to its network of dealers.
Moody’s Investors Service and Fitch Ratings have assigned preliminary ‘AAA’ ratings to the largest tranche in the transaction: a split Class A fixed- and floating rate notes series totaling $750 million making up over 76% of the pool.
Ford Credit Floorplan Master Owner Trust A, Series 2016-5 is the first floorplan deal from Ford since it co-issued its $647 million 2016-4 deal and the $150 million 2016-3 offering simultaneously.
The Class A notes, which will be split into a fixed- and floating rate tranches totaling $750 million and carry a 24.38% credit enhancement. The CE levels and the transaction share of the A notes (76.5%) is equal to four prior Ford Motor floorplan trust deals in the past year.
The Class B notes – the only other portion of the issue that are being publicly offered – are rated ‘AA’ by Fitch and ‘Aa1’ by Moody’s with 20.88% CE. The $49.02 million Class C bonds and the $29.41 million Class D bonds are unrated.
Both notes have lower credit enhancement levels that comparable deals by Ally Master Owner Trust (2015-3 had 26.5%) and General Motors Finance’s 2016-1 floorplan trust that had 27.86% CE, according to Fitch’s presale report published Thursday.
The Ford Credit floorplan trust, which has been issuing securitized receivables since 1992, has an average outstanding principal of $22.6 billion in 2016 for 3,378 designated accounts. The diversified dealer network has an average balance of $5.95 million for each account, or only 0.03% of the total trust balance, according to Moody’s.
However, over 55% of the accounts have balances over $10 million and the highest concentration is a 5% share of the pool among dealers affiliated with AutoNation. Nearly 13% of the dealers are in Texas.
The collateral in the pool are the receivables secured by the vehicles in the designated revolving floorplan account; the dealership – which purchased the vehicle for its inventory from the line of credit – repays Ford Credit after selling the underlying vehicle.
The transaction includes a step-up trigger of 25%, which would require an increase to the subordination or the reserve account by 4% of the pool if the three-month average monthly principal payment rate falls below that level. Below MPP rates have been between 40% and 50% since 2010, having declined slightly since 2015 from 48% to 41% this year.