Ford, Mercedes Launch Dealer Floorplan Securitizations Totaling $1.9B

Ford Motor Credit and Mercedes-Benz Financial Services USA launched a pair of dealer floorplan securitizations totaling $1.9 billion Thursday.

The $1.15 billion Ford Credit Floorplan Master Owner Trust A is the automaker’s first deal of the year backed by lines of credit to dealerships, marking a much slower pace than last year, when it had completed two deals by March.

But Ford vehicle sales were down 5.1% for the year through April, including a whopping 22.1% decline in car sales (trucks are up 2%), according tomotorintelligence.com.  Accordingly, the pool backing this latest deal has a high concentration of trucks, according to S&P Global Ratings and Fitch Ratings.

Both ratings have assigned triple-A ratings to the fixed/floating-rate split tranche of senior notes, which benefit from 24.38% hard credit support.

The notes are secured by the receivables from revolving floorplan accounts that Ford Motor Credit supplies to 3,315 franchised auto dealers to finance inventories of new and used cars and trucks, which in turn secure the receivables. The receivable is generally repaid when the dealer sells the vehicle.

The total trust portfolio stands at $20.6 billion or $6.2 million per dealer account. Ford Credit's weighted average spread in the latest pool is 1.32%.

According to S&P, there are no substantial changes in this deal from the previous series from the master trustissued last December. Monthly payment rates from dealers remain stable at an average of 39% for the three months ended March for the dealer obligors in the pool. The average principal balance for dealers is $20.1 million, with no reported net losses.

Ford’s deal is underwritten by Barclays, BNP Paribas, Credit Suisse, Deutsche Bank and Morgan Stanley.

Mercedes-Benz Financial Services USA’s $750 million offering is also its first of 2017. The notes are being issued through its dealer floorplan trust that is secured by a $3.08 billion pool of receivables from inventory financing of U.S. domestic dealers.

The offering consists of two series of notes of $375 million each, according to Fitch; the 2017-A notes will carry a three-year maturity and have a 21-month revolving period; the 2017-B series will be four years with a 33-month revolving period.  

Both carry triple-A ratings from Fitch and Moody’s Investors Service.

Both notes will carry a floating rate coupon of one month Libor plus 181 basis points, with hard credit enhancement of 16.5%.

These will be the 7^thand 8^thoverall securitizations by the Mercedes-Benz master owner trust.

The managed portfolio will encompass the inventory financing of 268 dealers, including AutoNation franchises that is limited to 11% of the portfolio.

Bank of America Merrill Lynch, Mitsubishi UFG and HSBC were lead underwriters.