Honda is planning to issue $1 billion of securities backed by auto loans, according to a filing with the Securities and Exchange Commission.
The deal, Honda Auto Receivables 2013-3, will issue four tranches of notes; the $281 million class A-1 is expected to mature in March 2014; the $300 million class A-2 is expected to mature in February 2016, the $305 million class A-2 is expected to mature in June 2016, and the $114 million Class A-4 has an expected maturity of September 2016.
J.P. Morgan and BNP Paribas are joint bookrunners for the deal, which is expected to close July 24.
Moody's Investor Service has assigned a preliminary P-1 rating to the money market tranche and 'AAA' ratings to the other tranches. In a presale report, it cited as a strength the Large proportion of low-rate subvened loans in the pool. These rates are offered through incentive programs and tend to attract higher quality borrowers who would otherwise pay cash. "The presence of these loans should have a positive impact on overall pool performance," Moody's said.
Moody's also noted that approximately 14.5% of the loans in the pools have original terms of over 60 months, which it said is greater than in Honda's previous transactio nor any of its prior transactions; such loans are generally riskier than shorter term loans.