Harley Davidson plans to sell $700 million of ‘Aaa’ rated securities backed by motorcycle loans the issuer originated.

The securitization, HDMOT 2015-1, will be rated by Moody’s Investor Service. Citigroup, J.P. Morgan and RBS are the lead underwriters on the deal. 

Trust will issue four tranches of notes: the class A1 notes are due February 2016, the class A2 notes are due January 2019, the class A3 notes are due June 2020 and the class A4 nets are due August 2022.

Moody’s noted in the presale report that the deal incorporates all of the improvements Harleys has made on securitizations since 2009. Securitizations the issuer sold between 2005 to 2008, have losses that are 1.6 to 1.9 times higher than Moody’s original expectations but the credit performance of its 2009, 2010 and 2011 transactions have improved dramatically.

According to Moody’s the pool is backed by loans with stronger borrwer quality than the issuer’s previous two securitizations (which include an $850 million deal completed in April 2014). For example, the transaction’s weighted average FICO of 710 is among the highest FICO pools in the past HDCC transactions and consistent with HDMT 2012-1, 2011-2 and 2011-1, which have performed at a historical low loss level.

“We attribute the improvement to much stronger borrower quality, as evidenced by higher FICO scores, lower LTVs and shorter loan terms; higher recoveries on repossessed vehicles; and a healthier economic environment,” the report states.



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