GM Financial and Hyundai are both issuing their first dealer floorplan financing securitizations of the year.
The GMF Floorplan Owner Revolving Trust is sponsoring $1.21 billion in a pair of new notes series backed by GMF’s rapidly expanding pool of receivables and vehicle collateral from revolving lines of credit extended to 1,115 U.S. General Motors dealers. The Series 2019-1 and Series 2019-2 offerings consist of bonds with expected three-year maturities that are being issued simultaneously issued.
The $400 million Hyundai Floorplan Master Owner Trust Series 2019-1 is the first in three years sponsored by Hyundai Capital America (HCA), the captive-finance unit servicing U.S. dealers for Hyundai Motor Co. and Kia Motors Corp.
GM and Hyundai join the captive finance units of Ford Motor Co. and Nissan North America in sponsoring the only automaker-affiliated sponsors for dealer floorplan financing this year. Ford Motor Credit’s two series issuances in 2019 total $1.3 billion, while Nissan Motor Acceptance backed the issuance of $1 billion in notes backed by dealer inventories in April.
GM Financial
The 2019-1 series will have a revolving period of 29 to 34 months in which the trust may add additional eligible receivables to the pool; with the 2019-2 series, the revolving period is 53 to 58 months.
The pool of receivables for each series will consist of $8.8 billion in total principal receivables, or an average of $7.9 million. GM Financial’s floorplan portfolio continues to grow quickly – its average principal was just $7.1 billion last, and was only $1.66 billion in the first year (2014) in which GM Financial became the exclusive captive-finance arm for the automaker.
GM’s servicing portfolio of dealer floorplans was approximately $10.32 billion as of March 2019, according to a presale report from Moody’s Investors Service.
Last year, GMF sponsored four floorplan series totaling $1.7 billion.
The GMF master trust has been expanding its base of dealerships which formerly aligned with Ally Bank, the legacy GMAC firm which still services GM dealers in legacy relationships from an estimated $9.7 billion receivables pools for 1,375 dealers as of mid-2018, according to Moody’s. (The Ally pool includes dealers from both Fiat Chrysler and AutoNation, as well.)
Nearly 83% of the collateral for the GMF trust’s 2019-1 and 2019-2 series are new models, and fleet-lease/daily rental vehicles make up 7% of the pool.
Monthly payments rates average 42.2% for the three-month period ending March 31, down slightly from last year’s 44.1% level. That trigger level for the three-month average MPR would require additional reserve fund collateral if breached; if receivables payments fall below 17.5%, an early amortization trigger would kick in.
The new series consists of four fixed-rate classes of notes with expected three-year maturities, including a $442.4 million Class A tranche of Class A notes with preliminary triple-A ratings from S&P Global Ratings and Moody’s. Also being marketed are a double-A rated Class B series totaling $30.3 million and a single-A rated Class C notes tranche sized a $27.27 million.
A $24.24 million Class D subordinate notes series will be retained by a special-purpose entity depositor that acquires the receivables and vehicle collateral from the captive finance lender on behalf of the trust.
The Class A notes benefit from27.87% credit support, which includes an initial 15.61% overcollateralization level.
Lead underwriters on the deal were Barclays, Bank of Montreal, Deutsche Bank, Lloyds Securities, JPMorgan, Mizuho and SMBC Nikki.
Hyundai
The $1 billion Hyundai Floorplan Master Owner Trust Series 2019-1 consists of a single class of $400 million in Class A notes due April 2022, with preliminary AAA ratings from S&P. The notes are supported by 21.6% credit support.
The receivables backing the notes are from floorplan financing arrangements through Hyundai Capital America with both Hyundai Motor Co. and Kia Motors Corp. U.S. retail auto dealers. The new series is the first since 2016, and just the fourth overall sponsored by the lender since 2009.
Average monthly payment rates by dealers has declined to 41.3% in 2018, from 43% in 2017 and a peak of 54.3% in 2014, according to S&P; but the level is well above the 32.5% level that would trigger additional collateral requirements.
Monthly payments rates are considered key barometers of dealer sales performance and how well dealers are managing inventory levels. Typically, cars financed through floorplan financing plans are repaid in full after a vehicle is sold.
Both Hyundai and Kia are part of Hyundai Motor Group (Hyundai Motor owners 34% of Kia).
The deal was underwritten by Barclays Capital.
