The GM Financial Consumer Automobile Receivables Trust, 2023-1 is coming to market to raise about $1.2 billion off of one of its strongest quality portfolios yet. GMCAR 2023-1 has a weighted average (WA) FICO score of 782, the highest score to date for the platform.
A high FICO score wasn't the only credit strength, according to Fitch Ratings, which intends to assign ratings to the notes. Underlying loans that had an original term of greater than 60 months represented 73.9% of the pool, down from 76.6% in the GMCAR 2022-4 transaction, and even lower compared with the 82.0% in the 2022-3 deal.
Still, the portfolio has a slightly higher concentration of loans with original terms of 76 to 84 months, with 17.85%. That was an increase from 13.8% in the GMCAR 2022-3 deal, the rating agency said.
General Motors Financial Company is sponsoring the deal, and SMBC Nikko Securities America is acting as the lead underwriter, according to Fitch. Some 41,226 loans, with an average current principal balance of $34,765 underpin the collateral pool. On a WA basis, those loans have a seasoning of 8.3 months. The deal's WA loan-to-value ratio dipped slightly from previous levels, reaching 97.05%, compared with LTVs on comparable deals, like the Hyundai Auto Receivables Trust 2022-C and Ford Credit Auto Owner Trust 2022-D, which were 100.1% and 100.6%, respectively.
GMCAR 2023-1 is certainly getting 2023 to a strong start in terms of issuance, but Fitch sounded a note of caution about what lays ahead for auto ABS and prospects for the auto sector. The rating agency expects deteriorating performance for prime auto ABS as auto prices, driven up by supply-chain constraints in 2022, begin to moderate. It is still a delicate balance, however, because while supply shortages are starting to loosen, they are expected to continue through 2023.
Yet another concern is that a mild recession, widely expected, will weigh on job growth and consumer demand and high interest rates will pose other risks to refinancing activity.
Taking all of these views into consideration, Fitch expects to assign 'F1+' ratings to the most senior class, the A-1 notes; then 'AAA' on the A-2-A through A-4 notes; 'AA+' on the class B notes; 'A+' n the class C notes; and 'A-' on the class D notes.
