Ford Motor Credit is marketing another $1.08 billion of bonds backed by prime auto loans.

Unlike its first deal of the year, this one has a five-year revolving period during which new collateral may be added as existing loans pay off. This can result in changes in pool quality, although any additional receivables must meet certain credit criteria.

The Ford Credit Auto Owner Trust 2017-REV1 will issue three tranches of notes with preliminary ratings from Moody’s Investors Service: $1 billion of senior class A notes with total credit enhancement of 9.5% are rated Aaa; $40.5 million of class B notes with 5.75% credit enhancement are rated Aa1 and another $40.5 million of class C notes with 3.75% credit enhancement are rated A1.

All of the notes have a legal final maturity of August 2028.

Bank of America Merrill Lynch is the lead underwriter.

This transaction's credit enhancement, initial pool composition, and the criteria for any future loans added to the pool are all consistent with the previously revolving transaction, completed last year.

Similar to the 2016 revolving transaction, the initial pool of loans backing 2017-REV1 transaction has a weighted average FICO score of 736, a weighted average original term of 65 months and nine months seasoning. Ninety-one percent of the loans are for new cars and 9% for used cars.  

The relatively low weighted average APR of the 2017-REV1 pool is 2.65%, which Moody’s said is attributable to the large percentage of contracts originated under incentive programs. The low interest rates tend to attract high quality customers who may otherwise purchase a vehicle with cash.

Moody’s expects cumulative net loss over the life of the deal to be just 1.75% in the event the transaction satisfies the floor credit enhancement tests; however this could rise, to 2.25%, in the event the transaction only satisfies the pool composition tests. These levels are unchanged from Ford’s most recent deal with a revolving period, but higher than its most recent transactions that begin to amortize right away.

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