GMAC UK Marketing 8th Auto Lease ABS

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GMAC is issuing its eighth asset-backed UK transaction in a £385.8 million (US$481.3 million) bond offering backed by individual and small-business vehicle lease contracts.

The securitization follows just weeks after parent General Motors agreed to the sale of its historic Vauxhall brand line of vehicles, which comprised the bulk of securitized assets in GMAC’s two most recent E-CARAT platform ABS deals.

The E-CARAT 8 PLC deal will consist of two series of notes, with size of the ‘A’ and ‘B’ tranches of bonds being sold to be determined. The ‘A’ notes will consist of over 82% of the pool’s assets, and have a provisional triple-A structured finance rating from both Moody’s Investors Service and Standard & Poor's.

The floating rate ‘A’ notes will have 18.6% credit enhancement, consisting of 17.7% subordination of the ‘B’ notes (rated 'A2' and 'AA') and an unrated subordinated note tranche plus a 0.9% reserve fund.

Bank of America Merrill Lynch, Lloyds Bank and RBC were co=lead managers on the deal.

The new transaction is slightly lower than GMAC’s last UK securitization in December for £416.7 million. The notes in E-CARAT 8 are supported by £420.2 million (US$524.2 million) in remaining receivables.  

The pool’s 46,706 contracts, both UK conditional sale and personal contract purchase (PCP) leases, were primarily to private individuals through Vauxhall-branded franchise dealers. They were originated by GMAC UK, the General Motors Financial Co. affiliate that is also servicing the loans.

One of the risks of the pool involves the higher percentage (56%) of contracts with balloon payments associated with PCPs, in which consumers are permitted to return in lieu of the balloon payment. The balance of bullet and balloon contracts was reversed in the prior E-CARAT deal in which just 43% had balloon payments.

The final balloon payments are securitized and represent 24.8% of the pool, according to Moody’s.

The contracts and PCPs have a weighted average remaining term of 3.3 years, and have been seasoned for 9.4 months. The weighted average portfolio interest rate is 4.34%. The pool’s collateral consists of primarily new vehicles (81.1%).

GMAC UK has assets of approximately £4 billion, with 73% of them securitized. The firm will retain 5% of the transaction to meet European risk-retention standards.

Vauxhall Motors is the trade name for General Motors UK Ltd. in Britain, and a subsidiary of GM’s Adam Opel AG. This month, GM agreed to sell Vauxhall and Adam Open to French automaker PSA Peugeot-Citro'n for €2.2 billion (US$2.37 billion).

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