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Ford nears $2B in lease-backed ABS issuance for 2017

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Ford Motor Credit is marketing bonds through a second 2017 securitization of prime auto lease receivables totaling $1.1 billion, as it returns to a familiar pattern of twice-annual lease-backed issuance it followed from 2010-2015.

In Ford Credit Auto Lease Trust 2017-B, Ford Credit (FMC) is issuing $1.0 billion in Class A bonds consisting of three classes of senior notes with triple-A ratings from Fitch Ratings and S&P Global Ratings, as well as a $192 million money-market tranche (rated A-1/F1+). The $440 million A-2 series will be split between fixed- and floating-rate tranches, while the $266 million A-3 notes due December 2020 and $102 million in A-4 notes due 2021 will carry fixed-rate coupons.

The 20.4% credit enhancement on the senior notes is unchanged from FMC's $906 million lease-backed transaction earlier this year as well as the trust's only 2016 issuance. Prior to 2016, FMC had issued two deals annually from its least trust.

The transaction will also have subordinate-note classes totaling $108.62 million.

Ford made slight changes from its previous transaction, according to presale reprots. The weighted average FICO of the 52,766 lease receivables increased to 751 from 747, and the percentage of leases between two and three years increased to 79.8% from 77.6%.

Both shorter-term leases (13-24 months) and longer-term (37-39 months) declined as a share of the poo by a combined 3.2%.

The expected cumulative net loss range of 0.75%-0.85% is unchanged with S&P. Recent Ford lease securitizations from 2015-2017 are performing within S&P’s expectations.

The total current value of the collateral is $1.25 billion, or $23,660 per vehicle; the base residual value is $933.5 million. The 11.9 months of seasoning is on par with prior Ford Credit lease securitizations.

The concentration of the popular Escape and Explorer SUVs and the F-150 truck series increased to 57% of the obligor pool, up from 52%.

Ford’s serviced lease portfolio was $26.5 billion as of June 30, with over 1 million contracts in the fold (more than doubling its size from 2012). Net losses were 0.38%, up slightly from 0.28% the year before. Total delinquencies are also stable at 0.83%, compared to 0.82% for the first six months of 2016.

The total residual loss on returned vehicles equaled 0.36% of the Auto Lease Guide’s original base residual value forecast.

Like other recent auto-ABS transactions, Ford Credit has excluded any lessees from the pool who have billing addresses in declared-disaster areas impacted by hurricanes Harvey and Irma. Florida and Texas are not included among the top five state concentrations in the pool.

The deal is expected to close Oct. 30. Citigroup is the lead underwriter.

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Auto ABS Auto leasing Ford Motor Credit