Ford Motor Credit and Mercedes-Benz Financial Services (MBFS) are each proposing billion-dollar auto-lease securitizations, according to ratings agency presale reports.
Ford Credit Auto Lease Trust (FCALT) 2021-A is a $1.6 billion transaction representing Ford Credit’s 20th deal backed by auto-lease receivables.
Mercedes-Benz Auto Lease Trust (MBALT) 2021-A is the 18th transaction backed by auto-lease receivables sponsored by the captive-finance arm for Daimler AG dealerships Mercedes-Benz vehicles.
The two deals will add to the pipeline of 2021 prime auto-lease transactions led earlier this month by
Ford
The pool of leases — which will collateralize an exchange note backing $1.4 billion in offered notes — includes 57,143 contracts with a discounted base residual of 64.5% — or the estimated amount of turn-in vehicles’ projected future resale value compared to its value at the time of securitization, according to Moody’s Investors Service.That is approximately .3% higher than Ford’s previous deal backed by lease contracts (FCALT 2020-B).
Over 90% of the contracts are for trucks and sport utility/crossover vehicles including the Explorer and Escape SUV models and the F150 pickup. These are generally less fuel efficient and carry the risk of more volatile future demand (and potentially stressed resale values) due to oil price fluctuation.
The contracts have average remaining terms of two years on 36-month contracts. Moody’s has an expected net credit loss of 0.5%, unchanged from Ford Credit’s previous lease securitization.
As of Sept. 30 of last year, Ford Credit’s retail auto lease portfolio with an average outstanding lease-contract balance of about $27.2 billion.
Ford Credit will market four classes of senior notes and two subordinate tranche offerings. The capital stack involves a $179 million money-market tranche, and three Class A tranches with preliminary triple-A ratings from Moody’s and Fitch Ratings. The Class A-2 tranche ($515 million) includes notes due July 2023, and the Class A-3 notes ($456.3 million) are due February 2024.
The Class A notes are supported by 23.2% total initial credit enhancement.
Lead underwriters for FCALT 2021-A are Citigroup, Credit Agricole, Lloyds, Deutsche Bank and Mizuho Securities USA.
Mercedes-Benz
MBFS is considering two pool sizes of either $1.2 billion (28,690 contracts) or $1.49 billion (35,662 contracts).
Both pools have lease obligors with weighted average FICOs of 788, signed to contracts with 13 months of seasoning on 39-month original term contracts.
Approximately 52.8% of the passenger-vehicle contracts are for sport-utility models, with the remainder consisting of passenger-vehicle models.
MUFG, Mizuho Securities and TD Securities are lead underwriters.
