Ford Motor Credit is marketing a $1.35 billion securitization of auto loans.
The transaction, called Ford Credit Auto Owner Trust 2015-REV1, has been assigned preliminary ratings by Fitch Ratings and Standard & Poor's. Bank of America Merrill Lynch, Morgan Stanley, Citigroup and SMBC Nikko Securities America are lead underwriters.
The trust will offer $1.25 billion of AAA’/'AAA' rated notes, $50.6 million of AA’/ 'AA' rated class B notes and $50.6 million of A’/ 'A' rated class C notes. The notes are all due July 15, 2026. Initial hard credit enhancement for the class A, B and C notes totals 9.50%, 5.75% and 2.00%, respectively. That's in line with levels charged on the last deal the issuer brought to market, 2014-REV2.
Most of the 2015-REV1 pool (89.6%) consists of new vehicle retail contracts. The weighted annual percentage rate (APR) of the pool is 3.74%; that’s the lowest rate of any Ford issuance going back to 2005.
Lower APRs typically indicate better underlying credit as these loans are generally offered to customers of higher credit quality. However, in this deal, the lower APRS may reflect "the various incentive programs offered by Ford Credit, which may not be driven necessarily by changes in credit quality, according to Fitch.
The pool has a weighted average life of 63.4 months and a weighted average remaining term of 54.7 months. Extended loan term (more than 60 months) contracts comprise 44.3% of the pool, a slight increase from 2014-REV2, but consistent with all pools since 2010, which ranged from approximately 37%43%. .
