General Motors Financial is preparing to sponsor a $818.3 million revolving securitization of prime-quality retail installment auto sales contracts.
GM Financial Revolving Receivables Trust, 2025-1, will sell notes through five tranches of A, B, C and D notes, all of which have a Dec. 11, 2037 legal final maturity date, according to Moody's Ratings.
With more than 100 securitizations through four other platforms, General Motors Financial has deep experience in these auto lease transactions, and that strengthens the credit to the notes, according to Moody's.
Borrowers in the collateral pool, represented by 61,688 contracts, have a weighted average (WA) FICO score of 779, consistent with recent GM transactions, Moody's said. Assets meet other criteria tests, including a WA loan-to-value ratio of 110%.
Net loss and delinquency triggers also help maintain cash flow to the notes and protect investors from losses during the deal's five-year revolving period. Depending on the trigger breached, the deal will require a boost in overcollateralization or start an early amortization period, Moody's said.
Total initial hard credit enhancement levels, by the A, B, C and D tranches, are 8.85%, 6.85%, 3.95% and 1.25% respectively. GMREV 2025-1 also benefits from a reserve fund of 0.50%, Moody's said.
BMO Capital Markets, Lloyds Securities, MUFG Securities Americas and RBC Capital Markets are lead underwriters on the deal.
The deal's five-year-long revolving period is one of the deal's main credit challenges. GMREV 2025-1's pool quality is high quality now, but there is the risk that it could change as General Motors Financial adds new receivables over time, according to Moody's.
There is also a high proportion of longer-term loans, as 72% of the pool balance is tied to loans with original terms of 61-84 months. Thirty-three percent of the pool falls in the 73–84-month original term bucket, which at least limits the pool to its exposure to the longer-term loans.
There is also concern that starting with the 2022-1 vintage, the managed portfolio performance has deteriorated slightly.
Moody's assigns Aaa to classes A and B notes; Aaa2 to the class C notes; and A2 to the class D notes.