GM Financial Canada Leasing is preparing to sell $577.5 million in asset-backed bonds to investors secured by retail, new vehicle closed-end leases with the platform's highest credit score to date.
Analysts writing for Fitch Ratings say the deal has an array of highlights that include a consistent least platform and strong residual value performances. The undiscounted residual value composition is 77.54%, higher than prior GCOLT deals, such as the GCOLT 2021-1, which was 70.50%, Fitch said.
The deal has an aggregate balance of $621 million, with some 15,081 leases on new vehicles. The average initial collateral pool consists of prime borrowers with a strong weighted average (WA) FICO score of 785, the program's highest to date, according to the rating agency. The supporting leases are for new General Motors Company affiliated-brand vehicles that GM Financial Canada Leasing had acquired from dealers in Canada, Fitch said.
BMO Nesbitt Burns, CIBC World Markets, RBC Dominion Securities and Scotia Capital are placement agents on the deal.
Among the deal's strong suits was the platform's strong residual value performance largely driven by low new-vehicle inventory. Fitch notes that GMFC saw residual value gains of 36.0%, as of the end of 2022, down from 58.9% in 2021, and higher than 28.9% in 2020, according to the rating agency.
Fitch also notes that the current deal has a non-declining reserve account of at least 0.50% of the initial securitization value, which is consistent with GCOLT 2021-1 and in line with all prior transactions. The deal has the lowest concentration of 60-month term leases, which only amounts to 1.6% of the pool. That is a significant drop from the 6.0% of 60-month term leases in the GCOLT 2021-1 deal.
Trucks, sport utility vehicles and crossover utility vehicles make up almost the entire pool.
Fitch says it will assign ratings of 'AAA' to classes A-1 through A-3; 'AA' to the class B notes; and 'A' to the class C notes. All of the notes have a final maturity ranging from April 21, 2025 through May 22, 2029.
