The GM Financial Consumer Automobile Receivables Trust is starting 2025 with a $1.3 billion sale of auto asset-backed securities (ABS) that could be upsized to $1.5 billion.
For both the original pool and the upsized amount, the trust will issue notes through seven tranches of mostly class A notes, and the capital structure is generally the same, according to Moody's Ratings. The A1 notes will mature on Jan. 16, 2026; and the A2 tranches (with A and B sub-tranches) have a maturity date of Jan. 18, 2028.
Through the rest of the deal maturity dates range from Dec. 17, 2029 on the A3 notes to July 16, 2032 on the class C notes, according to Moody's. All the class A tranches benefit from credit enhancement coverage equal to 6.10% of the pool balance, the rating agency said. The class B and C notes benefit from coverage equaling 4.50% and 3.00% of the pool balance.
Credit enhancement also includes a cash reserve fund equaling 0.25% of the balance; overcollateralization equaling; subordination and excess spread, Moody's said.
Credit Agricole Securities, Deutsche Bank Securities, J.P. Morgan Securities, Morgan Stanley and TD Securities are lead underwriters on the deal.
GM Financial is a frequent originator in the ABS market, having completed more than 100 transactions. Its experience in sponsoring and servicing auto transactions is considered a credit strength. The pool is also of high credit quality, as the assets have a weighted average (WA) credit score of 781 in both the original and upsized pools.
Also on a WA basis, the loans have an original term of about 69 months for both the base and upsized pools. About 73% of both the base and upsized pools contain loans with original terms longer than 60 months, Moody's said.
Yet the underlying loans' term presents a potential credit challenge, Moody's said. About 21% of the original pool includes loans with 76- to 84-month terms.
Up to 75% of the class A2 notes will be pegged to the Secured Overnight Financing Rate (SOFR), a floating rate benchmark. The assets pay a fixed interest rate, which could erode excess spread in the transaction.
