Moody’s Investors Service has assigned provisional ratings to Ford Credit Floorplan Master Owner Trust A, Series 2010-5.
Ford Motor Credit Co.'s (FMCC) $586.7 million, four-tranche deal is managed by RBS Securities and Morgan Stanley.
The rating agency enumerated the transaction's strengths on which the ratings of the notes are based.
For Class A notes, Moody's cited the available enhancement amounting to 13% subordination of the Class B, Class C and Class D notes, 12.00% subordination of the transferor interest, and a fully funded 1% reserve account. It also noted the transaction's available excess spread.
Moody's also highlighted the deal's high overall credit quality, both of the auto dealer floorplan receivables and the underlying collateral securing the floorplan loans, reflected in the historically low loss levels as well as relatively stable payment rate of the trust portfolio. This averages between 35% and 50% in the past years.
Additionally, a diversified pool of dealers mitigates the risks that associated with probable delays from an automatic stay in the event of the dealer’s bankruptcy or the losses sustained from any sold-out-of-trust situation.
Concentration limits are the keys to maintaining dealer diversification — 2% maximum for any individual dealer or 5% for dealers affiliated with AutoNation, Moody's said.
This concentration limit could work to add dollar for dollar credit enhancement to the deal to the point where the principal receivables in the trust that were bought from such dealers goes over any specified concentration limit.
Moody's also mentioned FMCC's experience as servicer and Wells Fargo as backup servicer as well as the legal and the transaction's structural integrity featuring a Delaware statutory trust and certain early amortization events. These serve to insulate the investor from worse-than-expected performance.
Moody's also assigned provisional ratings to Ally Master Owner Trust, Series 2010-5 (AMOT 2010-5). The five-tranche $772.2 million deal is managed by JPMorgan Securities. The master owner trust, Moody's said, plans to issue four classes of floating rate notes, comprising Class A through D, while retaining the fifth class of notes or Class E.
Fitch Ratings, which, like Moody's, just released a presale report on the deal, said that the collateral securing the notes will comprise a revolving pool of dealer floorplan receivables.
The receivables are composed of credit lines made by Ally to retail automotive dealers franchised by General Motors Co., Chrysler Group, and other original equipment manufacturers.
The revolving floorplan accounts will generally be used, Fitch said, to finance dealers’ new and used vehicle inventory and will be secured by the products financed.
Of the collateral securing the deal, 71.08% is made up of GM dealers, and roughly 20.02% were for Chrysler. Transaction proceeds will be utilized for general funding purposes, according to Fitch's presale report.
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