After proving that it has access to funding with its successful wholesale dealer floorplan transaction last week, Ford Motor Credit is unlikely to tap the U.S. floorplan sector for the foreseeable future, sources said. Despite the strong investor demand that led to an increase in size, Ford's master trust is approaching fully funded status and the issuer currently plans to wait until its series 2001-2 transaction matures next July before tapping the sector again.
Although Ford could come right back in the market with a floorplan transaction should the market conditions make it compelling to do so, it would have to first reduce its Motown Funding outstandings, something it has not historically done, said company spokeswoman Chris Solie. "Our public term funding plan has not changed. But when the market gives us the opportunity, we will access it." Solie added.
But Ford's Solie added that it was likely to do so only in the event that spreads for its floorplan ABS tighten to the point where Ford was compelled to do something it historically had not.
The first floorplan offering since Ford's reduced earnings outlook announcement in May was viewed as a new U.S. captive benchmark for the now-tiered sector. The three-year triple-A senior notes priced at 15 basis points over one-month Libor, with its single-A rated B class priced at 44 basis points over Libor. ABN AMRO, Barclays Capital and Credit Suisse First Boston acted as joint lead managers on the offering. Ford's previous floorplan deal, the three-year series 2004-1, priced last July at four basis points over Libor for triple-A and 22 basis points over Libor for single-A paper.
"The key is that Ford has access to the ABS market through the floorplan market." ABN AMRO Managing Director Brad Dansker, adding that demand was sufficient for an even larger upsizing. Orders were placed primarily with U.S. investors, with interest from Europe as well.
"Being below investment grade by one rating agency (Standard & Poor's) will lead to wider spreads in the floorplan securities due to its corporate ties," said another market source, stating what has become common knowledge.
But until next July, investors seeking the comparably yieldy coupon offered by 2005-1, Ford will most likely have to seek bonds in the secondary market. After freeing to trade last week, series 2005-1 was bid a half a basis point tighter, at 14.5 basis points over one-month Libor.
Ford Credit Floorplan Master Trust 2001-2, which priced July 18, 2001, is expected to mature July 17, 2006, with a legal final of July 15, 2008, according to the prospectus supplement filed with the Securities & Exchange Commission.
Solie cited the various funding sources that Ford has developed since early in the decade, which now include whole loan sales, additional conduit capacity as well as its auto loan and floorplan securitization platforms. Additionally, Ford also has its Globaldrive floorplan issuance vehicle available to securitize its European-originated dealer floorplan receivables. Ford also hopes to sell auto lease-backed paper, added Solie, although timing was not available.
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