© 2024 Arizent. All rights reserved.

Honda Plans $1B Auto Loan ABS

Honda  is in the market with its first securitization of retail auto loans of the year.

The $1 billion deal, Honda Auto Receivables 2014-1 Owner Trust, will issue a $277 million money market tranche and three longer-dated tranches with preliminary 'AAA'/'Aaa' ratings from Fitch Ratings and Moody's Investors Service: a $303 million tranche maturing in August 2016, a $330 million tranche maturing in December 2017, and a $90 million tranche maturing in February 2020. All benefit from credit enhancement of 2.5%. JP Morgan Securities is lead manager on the deal.

The notes are backed by prime loans with a weighted average FICO score of 754; similar to the issuer’s  2012 - 2013 pools, according to Fitch's presale report.

The rating agency also noted that the pool features a large percentage of subvened loans, or loans with artificially low interest rates offered through incentive programs. These programs tend to attract higher quality borrowers who would otherwise pay cash. They tend to have a positive impact on the overall performance of the pool.

However, the percentage of loans in the 2014-1 pool that have an original term to maturity of greater than 60 months is also higher than recent deals, at 14.8%. Generally, loans with an original term to maturity of greater than 60 months are riskier than loans having a shorter term to maturity.

 

For reprint and licensing requests for this article, click here.
MORE FROM ASSET SECURITIZATION REPORT