American Honda Finance Corp. is returning with its third securitization of super-prime auto loans in a $1 billion transaction.

Honda Auto Receivables 2017-3 Owner Trust (HAROT) features Honda’s standard four-tranche senior note waterfall structure and a pool of above-average prime borrowers (FICO average of 771) that is consistent with most of the captive lender’s securitizations since 2015.

The initial offered amounts (totaling $926.25 million) include a one-year $190 million Class A-1 series, a $318.25 million Class A-2 notes series due January 2020, $323 million in bonds for Class A-3 notes due September 2021, and a $95 million Class A-4 tranche of six-year notes.

Bloomberg

All of the multiyear notes are expected to be paid off in 2019 and 2020, according to the filing.

All of the notes but the A-1 are triple-A-rated by Fitch Ratings and S&P Global Ratings, according to presale reports and a trust prospectus; the A-1 notes receive the equivalent top money-market rating of F1+ rating from Fitch and A-1+ by S&P.

Credit enhancement of 2.75% is in line with recent deals. The transaction is also supported by a yield supplement account that will provide excess spread of 2.14%.

Honda’s third auto loan securitization of the year brings its total 2017 issuance to $3.3 billion, putting it slightly behind the pace of its 2016 volume of $5.14 billion.

The transaction involves 57,459 loans for the purchase of new or used Honda and Acura vehicles from American Honda franchised dealers. The loans have an average principal balance of $17,403 and a weighted average annual percentage rate of 2.14%. The loans’ average terms are 61.1 months, and the loans are seasoned an average of about 13 months.

Delinquencies remain near historic lows of 1.13%. But in its prospectus, American Honda Receivables LLC (the depositor in the transactions) warns of the potential macroeconomic disruptions from the extreme weather events of Hurricanes Harvey and Irma. Nearly 12% of the pool’s assets are located in Texas and Florida.

Joint bookrunners on the transaction are BNP Paribas, JPMorgan and SMBC Nikko. Co-managers are Barclays, BNY Mellon Capital Markets, Lloyds Securities and Societe Generale.

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