Ford Motor Credit plans to issue a $1.5 billion of closed-end leases on various Ford brand, new vehicles.
Barclays is the lead underwriter on the deal.
The capital structure features two tranches with preliminary ratings by Fitch Ratings: $1 billion of AAA’-rated, class A notes and $76 million of AA’-rated, class B notes. Fitch will not rated the $70 million class C notes. Credit enhancement for the class A, B, and C notes totals 20.40%, 15.90%, and 11.70%, respectively. The structure will also offer a $280 million money market fund tranche rated F1+’.
The notes are backed by pool of closed-end leases originated by Ford dealers and purchased by one or more Ford Motor Credit-created titling companies directly from franchised dealers.
The leases have a weighted average FICO score of 746 and a weighted average original term of 34.1 months; 79.14% of the pool consists of leases with terms of 36 months or more, according to Fitch's presale report. None of the lease contracts have original terms greater than 48 months. Longer-term leases are riskier because the leases can pose potentially higher risk for residual value-setting accuracy, explained Fitch.
Since late 2009, Ford Credit has gradually increased lease originations in step with sales increases. As of March 31, 2014, the issuer’s U.S. retail lease portfolio was $17.4 billion, up 33% from $13.1 billion at the same period in 2013.
