Honda American Finance Corp and Porsche priced a total of $1.4 billion in securities backed by prime auto loan receivables.
Honda’s deal, Honda Auto Receivables 2014-2 Owner Trust, its second of the year, issued $1 billion of securities included three tranches rated AAA’/ AAA’ respectively by Moody’s Investors Service and Fitch Ratings.
A $299 million class A-2 notes with a weighted average life of 1.02-years priced at 14 basis points over the eurodollar synthetic forward curve. Both the $350 million class A-3 notes with a weighted average life of 2.11-years and the $95 million class A-4 notes with a weighted average life of 3.07-years priced at 21 basis points over the interpolated swaps curve. All four classes benefit from subordination of 2.5% and an 0.25% reserve fund.
Pricing was disclosed in a regulatory filing, which did include information about the class A-1 money market tranche.
Bank of America Merrill Lynch, Citigroup, and Morgan Stanley are the underwriters.
The transaction is backed by 57,855 contracts, 85.56% of them on Hondas and 14.44% on Acuras. The pool has a similar weighted average FICO score and similar seasoning to recent transactions, according to the presale reports.
The weighted average APR of the 2014-2 pool is 2.20%; which reflects the large number of loans with subvented, or subdisized, interest rates. These incentive programs are generally limited to the higher quality borrowers who might otherwise purchase a vehicle with cash. Moody’s expects the presence of these loans should have a positive impact on overall pool performance.
Porsche also priced $488.3 million of notes backed by prime auto loan receivable via Financial Auto Securitization Trust 2014-1, according to a person familiar with the deal.
Three tranches with preliminary triple-A ratings from Standard & Poor's and Fitch were offered: $138 million of class A-2 notes with a weighted average life of 1-year priced at 13 basis points over the EDSF; $138 million of class A-3 notes with a weighted average life of 1.92-years priced at 18 basis points over the EDSF; and $68.3 million of class A-4 notes with a weighted average life of 2.91-years priced at 25 basis points over the interpolated swaps curve.
Barclays Capital is the lead underwriter on the deal, which is backed by 11,721 prime auto loan contracts made to purchase Porsche, Bentley, and Lamborghini automobiles, with an aggregate outstanding balance of $507.87 million.
The pool’s weighted average FICO score of 781 “is one of the highest compared to peer pools,” according to the S&P presale report.