The Honda Auto Receivables 2023-1 Owner Trust is preparing to issue about $1.3 billion in auto asset-backed securities, in a deal that could be expanded to $1.6 billion.
Prime-quality retail installment auto loan contracts will comprise the collateral pool as of the Feb. 1, 2023 cutoff date, according to a pre-sale report from Moody's Investors Service. Citigroup Global Markets is the lead underwriter on the deal. The Asset Securitization Report deal database, meanwhile lists BNP Paribas, Deutsche Bank Securities and Mizuho Securities as managers.
The deal is slated to come to market on February 24, with notes priced over the interpolated yield curve, according to ASR's database. Guidance wasn't available for the most senior notes, but the A-2 notes got guidance of 40 to 42 basis points (BPS) over; the A-3 notes receive guidance of 60 to 62 bps and the A-4 notes are expected to price 73 to 75 bps over the I-curve.
As for other collateral pool characteristics, new cars made up virtually the entire pool, or 92%. On a weighted average (WA) basis, the loans have a FICO score of 766, an average percentage rate (APR) of 3.06%, an original term of 63 months, and 50 months of a remaining term.
A cash reserve provides liquidity to the notes, according to Moody's, while a reserve fund, subordination and excess spread provide credit enhancement.
Moody's expects to assign ratings of 'P-1' to the class A-1 notes; and 'Aaa' to the A-2 through A-4 notes. All of the notes have total initial hard credit enhancement of 2.75%, Moody's said.
Legal final maturities, however, range from Feb. 21, 2024 on the A-1 notes through June 21, 2029.
