GMAC Mexicana is on the road with the country's first pure auto loan ABS in the public market, according to sources. Tipping the scales at about Ps1.4 billion ($109 million), the A note will appeal to private banking clients for its short average life of 1.4 years, said a source close to the deal. "It makes a lot of sense to pitch it to private banking," he added. That will likely be one of the areas in which joint leads HSBC and Citigroup brokerage Acciones y Valores will be focusing their efforts during a roadshow that kicks off the week of March 1. HSBC structured the transaction as well.
The A tranche is expected to garner a rating of triple-A on the national scales of Fitch Ratings and Standard & Poor's. Part of the notes' enhancement comes from a 21.6% subordination from a B tranche. S&P also rates GMAC Mexicana 'Above Average' as an auto loan servicer.
The transaction will be the first off a shelf amounting to Ps15 billion. Closing is anticipated for the third week of March.
The deal is backed by 15,221 auto loans with a current outstanding volume of Ps1.9 billion. The current average weighted life is 41 months.
The deal's structure is similar to auto loan ABS issued by GMAC in the U.S., which number more than 65 deals for a volume of $120 billion.
There have been private transactions in the auto loan space in Mexico, but publicly there have only been deals backed by leases, a mix of loans and leases, and dealer floorplans. GMAC itself issued dealer floorplan ABS in late 2008.
The last big step forward for the auto financing ABS in Mexico was in late 2006, when Merrill Lynch underwrote a deal by Navistar. Backed by a mix of truck leases and loans, the transaction was registered as a cross-border deal but denominated in pesos.
Originator Unifin Arrendadora introduced the Mexican marketplace to car leases in early 2006. Since then it has branched out into equipment leasing ABS as well.
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