A pool of closed-end vehicle leases extended to prime-quality borrowers will secure the $1.2 billion in asset-backed securities (ABS), the second such deal to come to market this year from the platform.
New securitization issuance has been a little more tepid compared with last year, overall, the GM Financial Automobile Leasing program is coming to market at the same interval as 2022 and 2021, according to the Asset Securitization Report's deal database.
In both 2022 and 2021, the platform came to market to raise $2 billion in February, another $1 billion each April or May and another $1 billion each August, according to ASR's database.
TD Securities is the deal's underwriter, according to pre-sale reports from both Fitch Ratings and S&P Global Ratings. TD was the only institution mentioned in this particular deal, but previous deals included a raft of other names among its managers, including BMO Capital Markets, BNP Paribas, Nikko Securities America and JPMorgan Securities, according to ASR.
GMALT 2023-2 offers note holders several advantages from a credit perspective, according to Fitch, including strong residual value realizations on the cars being financed. Supply constraints stemming from factors like a semiconductor microchip shortage helped to sustain used car prices in the COVID-19 pandemic. GM residual performance posted gains of 40.7% at yearend 2022, up from 32.7% in 2021 and 12.7% in 2020, Fitch said.
In changes from the previous transaction, S&P finds that the pool's undiscounted base residual value—as a percentage of aggregate securitization value—was 75.91%, down from 77.02%. On a dollar value basis, the average base residual value increased to $22,747, up from $22,490, according to the rating agency. The percentage of leases with original terms of up to 24 months increased to 7.40%, up from 5.06% on the previous deal, the rating agency said.
GMALT 2023-2 will issue notes through eight classes of fixed-rate notes, using subordination as one form of credit enhancement, while the five class A notes have a credit enhancement level of 19.15%, according to Fitch.
Fitch expects to assign ratings of 'F1+' to the class A-1 notes; 'AAA' to the A-2-A through A-4 notes; 'AA' to the class B notes; and 'A' to the class C notes.
