Ford Credit is readying its first two offerings of the year of notes backed by dealer inventory financing.

The Ford Credit Floorplan Master Owner Trust A Series 2018-1 will issue four tranches of three-year notes totaling $805 million and the Series 2018-2 will issue four tranches of five-year notes totaling $345 million. The senior tranche of Class A notes for each series carries preliminary triple-A ratings from Fitch Ratings and S&P Global Ratings.

Initial credit enhancement for the Class A notes of each series is 24.38%, unchanged from Ford’s six previous floorplan securitizations.

JPMorgan is the lead structuring agent; underwriters include JPMorgan, BNP Paribas, Citigroup and SG Americas Securities.

Bloomberg

The notes are backed by a revolving pool of dealer floorplan receivables on credit lines extended by Ford Motor Credit Co. to primarily franchised Ford, Lincoln and AutoNation dealers. In total there are $19.6 billion of receivables across 3,234 dealer accounts, with each having an average balance due of $6.4 billion. The dealers pay a weighted average spread of 1.29% over the prime rate.

Over the last two years, Ford has increased its floorplan distribution to dealers in its highest-tier risk rating, with 89.6% associated with the top-level Tier 1 group (up from 88.1% in 2016).

The monthly payment rates for dealers remains stable, with an average monthly payment rate of 40.5%, slightly up from 38.9% in 2016 and far above the 25% trigger that would require a subordination step-up period or an early amortization if credit enhancement is insufficient.

The Ford Credit floorplan trust has 16 term floorplan series and three variable-funding notes outstanding.

In January Ford reported full-year 2017 profits of $8.4 billion, down from $10.6 billion in 2016. The company has a 14.8% U.S. market share.

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