Retail motorcycle contracts will secure $607 million in asset-backed securities from the Harley-Davidson Motorcycle Trust, series 2024-A. It is the program's first securitization of the year, with many structural similarities to the 2023-B deal.
Class A notes compose all the notes in the deal, to be sold to investors through four tranches in a deal that might close by May 22, according to Moody's Investors Service's ratings analysts. Like the 2023-B series, the notes benefit from initial hard credit enhancement amounting to 5.00%, a reserve account representing 0.25% of the collateral pool balance, and overcollateralization representing 4.75% of the collateral pool balance, the rating agency said.
Harley-Davidson Motorcycle Trust, 2024-A will repay the notes sequentially, as the class A notes receive all the principal distributable amount until noteholders are paid in full, according to Fitch Ratings analysts, whose analysts also assessed the notes. The notes have maturity dates ranging from May 15, 2025 through Dec. 15, 2031.
Should a default occur, the notes will be accelerated, and after servicer advances, trustee fees and asset representations reviewer fees and expenses are paid, the notes will receive principal payment on a pro rata basis, starting with the A1 notes, until all notes are repaid in full.
A default seems highly unlikely, though, as HDMOT has a pool of high-quality assets. The underlying contracts were extended to highly rated borrowers, who a weighted average (WA) basis have a FICO score of 758. Further, the concentration of borrowers with FICO scores below 700 decreased to 12.13% of the pool, according to Fitch. The rating agency also regards Harley-Davidson Credit Corp., the deal sponsor, as a capable originator, underwriter and servicer for the series, Fitch said.
The contingent of managers and lead underwriters is much longer on the series 2024-A notes that it was on the series 2023-B, according to Moody's. BBVA Securities, BMO Capital Markets, CastleOak Securities, Lloyds Securities, Mizuho Securities, PNC Capital Markets, R. Seelaus & Co., TD Securities and Wells Fargo Securities are all lead underwriters on the deal, Moody's said.
The 2023-B series, according to the Asset Securitization Report's deal database, counted Barclays, J.P.Morgan Securities, Mitsubishi UFJ Securities as managers.
Fitch assigns ratings of F1+ to the A1 notes; and AAA to the A2 through A4 notes. Moody's assigns P1 to the A1 notes and Aaa to classes A2 through A4.
