The third round of government stimulus checks to consumers is also providing a boost to GM Financial’s second prime auto-loan securitization expected to close in April.
In the captive finance auto lender’s next transaction – the $1.32 billion GM Financial (GMF) Consumer Automobile Receivables Trust 2021-2 – Moody’s Investors Service has lowered its net credit loss expectations for the deal to 1.15%, or 35 basis points, compared to GMF’s first deal of the year.
The drop in cumulative net loss projections from the prior deal “reflects the steady but uneven recovery of the macroeconomy,” according to a Moody’s presale report issued Wednesday. “In particular, the US consumers have shown a remarkable degree of resilience partially owing to the large-scale government stimulus.”
Fitch Ratings derived a forward-looking credit loss expectation on the deal of 1.55%, also a decline from the two most recent 2020 deals rated by Fitch.
The pool consists of 43,130 contracts to borrowers with a weighted average FICO of 772, similar to recent GMF-sponsored ABS deals. The weighted average APR paid by borrowers is 4.35%.
About 85% of the loans are long-term contracts with original terms between 61-84 months, with seven months of seasoning. The 84-month loan share is 8.55% of the collateral pool, an exposure that is on the “higher side compared to previous GMCAR transactions,” noted Moody’s.
Trucks, SUVs and crossovers make up 90% of the pool’s vehicle-type concentration, and new vehicles account for 80.7% of the pool.
The transaction features four senior-note classes and three subordinate tranches. The Class A-1 money-market account totaling $230.2 million has each agency’s highest short-term ratings of P-1 (Moody’s) and F1 (Fitch). Each agency affixed a preliminary triple-A rating to the remaining Class A term tranches totaling $1.01 billion.
Moody’s also assigned an Aaa to the $21.2 million Class B tranche.
The deal is the 17thon GMF’s prime loan shelf (GMCAR). GMF also issues securitizations for leasing contracts, dealer floorplan inventory pools as well as non-prime loans through its AmeriCredit Auto Receivables Trust platform.
TD Securities was lead underwriter on the deal.
