Ford Motor Credit’s third offering of bonds backed by dealer inventory financing this year is keeping pace with its 2017 deal count – but is almost $1 billion off volume from a year ago.
According to presale reports from Fitch Ratings and S&P Global Ratings, Ford is prepping a sale of $805.92 million in a new 2018-3 issuance from its Ford Credit Floorplan Master Owner Trust (FORDF) A Series platform.
The new issue will bring the total volume of FORDF securities sold this year to just over $2.08 billion, down from $3.03 billion in a three-issue note series from the master trust in 2017.
The lower amount of principal receivables is reducing average dealer balance with the floorplan program. According to presale report data, $18.04 billion in principal receivables across 3,163 dealer accounts has fallen from $19.6 billion during Ford’s first 2018 floorplan issuance in March, and from $20.6 billion a year after the issuance of a third series of notes from the FORDF trust.
The decline coincides with an overall decline in year-to-date vehicle volume sales for Ford of 2.4%, although most of that decline is from the reduced number of passenger sedans being sold – or even offered. The sale of popular trucks, SUVs and vans (making up 81% of sales volume) are up 2.1% to 1.6 million.
The average transaction volume of $36,800 in October set a new record high (up $1,400 from a year ago).
The new 2018-3 series of notes will include a $700 million Class A notes issuance split between fixed- and floating-rate tranches, with 24.35% credit enhancement and preliminary AAA ratings from both S&P and Fitch. Ford did not include a fixed-rate tranche in its most recent transaction in March.
The capital stack also includes a double-A rated Class B tranche totaling $32.2 million, and two unrated Class C ($46.05 million) and Class D ($27.6 million) subordinate note tranches.
Fitch said there have been “no material changes” in collateral performance since March, with the average monthly payment rate stable at approximately 40%. The monthly payment rate is a measure of dealer sales and inventory management, averaging the rate at which dealers repay the trust with proceeds of vehicle sales that pay off the advances made to the dealer to finance a new vehicle’s wholesale purchase from the factory.
Dealers usually pay the full balance due on a vehicle after a retail sale.
More than 90% of the proceeds in 2013-3 are to finance new-vehicle inventory financing. The new pool includes concentration limits of 20% for used vehicles, 5% for dealers affiliated with AutoNation and 4% for vehicles financed for fleet sales.
The balance of receivables on vehicles that have been in inventories more than 270 days represents 5% of the new pool series balance, below that of 6.7% from a year ago.
As of September Ford Motor Credit had $9.6 billion in outstanding notes on its public floorplan issuance and $2.9 billion through privately placed and 144A registration-exempt issuance.
