Honda priced an upsized, $1.5 billion auto loan securitization, according to a regulatory filing.

The deal, Honda Auto Receivables 2014-1 Owner Trust, consists of four tranches:

A $416 million tranche with a weighted average life (WAL) of 0.34 years priced at par to yield 0.19%. It is rated P-1/F1+ by Moody's Investors Service and Fitch Ratings.

Three longer-dated tranches are rated AAA/Aaa: a $511 million tranche with a WAL of 1.14 years priced at 14 basis point over the eurodollar synthetic forward curve; a $390 million tranche with a WAL of 2.18 years priced at 18 basis points over interpolated swaps and $183 million tranche with a WAL of 3.02 years priced at 23 basis points over interpolated swaps.

All four tranches benefit from credit enhancement of 2.5%.

JP Morgan Securities is lead manager on the deal; BNP Paribas and Deutsche Bank Securities have joined as joint bookrunners. There are also four co-managers: BofA Merrill Lynch, BNY Mellon Capital Markets, Citigroup and Morgan Stanley.

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.


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