GM Financial’s first securitization of 2021 includes the highest-ever share of six- and seven-year loans in a pool sponsored by the General Motors captive-finance company.
According to ratings agency presale reports, a proposed $1.31 billion collateral pool for GM Financial Consumer Automobile Receivables (GMCAR) Trust 2021-1 includes a 15.66% share of loans of 73-to-75 month terms. That is up from 12.24% in the previous issue (2020-4) from the GMCAR shelf.
For loans between 76 and 84 months, the pool share is 4.15% of the unpaid principal balance — compared to 3.87% in the prior deal.
This is only the third GMF deal to include loans of up to 84 months, which are expanding as a share of GMF originations to keep buyers in affordable monthly payments as new and used-car prices continue to escalate.
The share of extended terms would be slightly lower if GMF chose to upsize the deal ($1.66 billion).
GMCAR 2021-1, which is being led by Deutsche Bank, includes four classes of senior notes as well as three subordinate tranches. Both S&P Global Ratings and Moody’s Investors Service have issued preliminary triple-A ratings to three of the senior term tranches.
The two-year Class A-2 and four-year A-3 note tranches are similarly sized at $469.7 million (or $578.1 million if upsized), and a Class A-4 tranche due May 2027 totals $113.5 million (or $139.7 million).
The transaction will also feature a $203.9 million or an upsized $251 million money-market tranche with each agency’s highest short-term rating.
The average principal balance is $29,142 after nine months of seasoning, with a weighted average borrower FICO of 773. The average APR is 4.26%, up from 4% but down from rates ranging from 4.41% to 5.28% across the first three GMCAR deals in 2020.
Both agencies warn about the ongoing uncertainties on how the COVID-19 pandemic will impact the transaction and the auto industry, and each maintains a negative outlook on GMF and parent General Motors (rated BBB by S&P, Baa3 by Moody’s).
But each agency also holds low credit-loss expectations on the new transaction that are comparable to pre-COVID transactions issued by GMF — S&P with a 1.4%-1.6% credit-loss range, and Moody’s with a 1.5% loss projection.
This is GMF’s 16th overall prime auto-loan deal.
