GM Financial and Toyota Motor Credit wasted no time in returning to the securitization market following the conclusion of an industry confab in Las Vegas; the two are marketing nearly $3 billion of prime auto-related bonds.
The $1.25 billion GM Financial Automobile Leasing 2017-1 is secured by $1.36 billion in 54,680 lease receivables for autos, crossovers, light-duty trucks and SUVs.
Four classes of senior notes will be issued, a $182 million money-market tranche; $450 million in a two-year Class A-2 floating/fixed-rate split series; plus $387.84 million in Class A-3 notes and $80 million in Class A-4 bonds, both due 2020.
Standard & Poor’s and Moody's Investors Service expect to assign and AAA to the term notes. S&P assigned an A-1+ to the money market tranche, while Moody's assigned an equivalent P-1.
This is the ninth lease securitization by GM Financial since launching its existing platform in 2012, and is more than 25% larger than previous transactions, which were just over $1 billion. It includes higher subordination levels than previous GMALT deals, driven by a higher percentage of senior-note subordination and targeted initial overcollateralization.
For the Class A senior note structure, total initial hard credit enhancement (non-amortizing) is 19.9%, up from 18.4% in prior deals. That’s driven by an increase to 11.15% subordination from 10.15% from the last five lease receivables issues. The hard CE is now 22.4%, compared to 21.4% previously.
The initial OC level is now 8.25% compared to 7.75% previously, although the target OC of 10.75% is unchanged. In a new feature from the 2016-3 transaction, the target OC will step down to 9.75% from the 10.75% initial level after the senior Class A-1 and A-2 notes have been paid in full.
GM, like most lenders, is experiencing increasing levels of delinquencies and defaults, although they remain benign, according to S&P. The 30-day delinquency level in the $35.7 billion lease portfolio of 1.2 million contracts is 1.24%; the annualized repossession rate is 1.03%. S&P has pegged an expected credit loss of 1.15% on the pool.
The collateral for the latest deal consists of a slightly higher percentage of leases with original terms of between 37 and 48 months (56.6%, compared to 55.2% in the last deal). The company also pooled a larger percentage of crossovers and SUVs (44.4% and 12.1% of the collateral, respectively.). Nearly 45% of the pool is concentrated in leases for GM’s Silverado, Equinox, Malibu, Terrain and Acadia lines.
The average buyer FICO is 755.
Toyota Launches 20th ABS Since 2010
Toyota is returning with its 20th securitization of prime loans for new and used Toyota-branded vehicles in a $1.5 billion bond offering secured by $1.61 billion in loan receivables from the captive finance company's $50 billion amassed portfolio.
The pool includes 93,151 contracts with an average loan balance of $17,289 financed with an average weighted APR of 2.2%. A large majority of the borrowers have prime-level FICOs above 700, and finance with an average loan-to-value ratio of 97.27%, according to a presale published Thursday by S&P.
Four classes of senior notes will be issued in the transaction: $401 million in Class A-1 money market notes are rated A-1+ by S&P and P-1 by Moody's; $477 million in a split floating/fixed-rate tranche series of two-year notes; $428 million in Class A-3 notes due 2021; and $156.49 million in five-year class A-4 notes. All of the term tranches carry AAA ratings from S&P and Moody's.
There will also be a $37.51 million tranche of subordinate Class B notes rated AA+ by S&P and an A-1 by Moody's. The B notes pay only principal.
The transaction, through lead underwriter Bank of America Merrill Lynch, includes the standard 2.75% initial credit enhancement (3.6% target) of previous Toyota transactions. The total available credit support includes an express spread of 7.1% for the Class A notes and 5% for the Class B series, which would cover 11.8x and 9.3x, respectively, of the cumulative net loss range of 0.55%-0.65% S&P has established for the deal.
The loans are still primarily new-car loans (78.6%), but the percentage of extended term loans in the pool (originated between 61-72 months) increased to 34.6% from 30.8%.
The deal is the fifth from Toyota to be issued under its Regulation AB II-compliant shelf, which required more asset-level data disclosure to investors.
