Ford Motor Credit is returning with a second securitization of dealer inventory financing in two months

Ford Credit Floorplan Master Owner Trust A, series 2016-2 will issue a single, $750 million tranche of seven-year notes with a preliminary ‘AAA’ rating from Fitch Ratings. The notes benefit from credit enhancement of 24.27%; unchanged from the last deal rated by Fitch (2015-3), but down slightly from 24.38% on Ford’s previous deal (2016-1), completed in February.

The notes are being offered privately under Rule 144A of the U.S. Securities Act of 1933.

They are secured by a revolving pool of “floorplan” receivables arising from credit lines to retail automotive dealers franchised mainly by Ford Motor Co. Among the factors Fitch cited in its ratings, the the trust receivables in this series have a high percentage of loans backing new vehicles at over 93%, are geographically diverse and have strong collateral aging with only 3.5% of the trust inventory aged past 270 days. That is consistent with levels seen in deals Ford has brought to market over the past four years.

Fitch also noted in its presale report that financial health of Ford’s dealer network is currently strong with the majority of dealers profitable in early 2016. In addition, dealers are subject to concentration limits, mitigating the risk of individual dealer defaults, and losses. Exposure to certain individual vehicle types and segments is also limited.

J.P. Morgan is the lead arranger; Clayton is the asset representation reviewer.

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