GM Financial, the captive auto financing arm of General Motors, plans to securitize $1 billion of auto lease receivables, the issuer’s second deal this year, according to Standard & Poor’s.
The Series 2015-2 transaction is backed by a pool of retail closed-end vehicle leases made to prime and non-prime borrowers, all of which finance new GM affiliated brand vehicles. J.P. Morgan is the lead underwriter.
Standard & Poor’s assigned preliminary ratings of AAA’ to the class A-2, A-3 and A-4 notes, due April 2018, December 2018 and July 2019 respectively. The notes benefit from credit enhancement at 26.1%.
At the subordinate level, the trust will offer AA’ rated class B notes that benefit from credit support of 22.6% and A’ rated class C notes that benefit from credit support of 19.3%; both notes are due July 2019. Also offered are BBB’ rated, class D notes due November 2019 that benefit from credit support of 15.8%.
GM Financial made some improvements to the credit quality of its 2015-2 pool. For example the pool features an increased weighted average FICO of 739 compared to 736 in the issuer previous transaction, GMALT 2015-1.
The issuer also increased the number of leases with terms of 36 months or less to 34.9% from 28.1%. The percentage of leases with an original term of 37-48 months decreased to approximately 65.1% from 71.9%. Leases with 48-month terms typically have higher credit losses than 36-month leases.
GM Financial's total U.S. portfolio of retail lease contracts consisted of 291,005 contracts totaling approximately $8.036 billion for the three months ended March 31, 2015.
Since 2012, the issuer’s lease portfolio has experienced “very strong growth”, more than doubling its value each year, according to S&P. “We expect continued strong growth given that GM Financial is now the exclusive lease provider across all GM brands,” stated the presale.