American Honda Finance Corp. (AHFC) is in the market with a securitization of prime auto loans, according to a pre-sale report by Fitch Ratings.
Credit Suisse is the lead underwriter on the deal, due to close Nov. 25.
Totaling $1.03 billion, the deal is split into five tranches. A roughly one-year, A-1 tranche for $282.2 million is rated F1+sf.’ Triple-A-rated notes include a $249-million, A-2 tranche maturing Jan. 17, 2017; a $376-million, A-3 tranche due Sept. 17, 2018; and a $90-million A-4 piece due Oct. 15, 2020.
The deal also offers an unrated equity tranche for $25.6 million.
Collateral consists of new and used Honda and Acura automobile, light-truck and utility vehicle loans. AHFC is the servicer in addition to originator.
The underlying pool of borrowers has a weighted average FICO score of 757. New vehicles make up 90.6% of the total being financed.
Fitch rates AHFC F1’ and its parent company, Honda, A’ on the long-term scale.
Compared to recent prime auto deals issued by Nissan and Volkswagen, the average FICO score in Honda’s transaction is a bit lower — the other two had a 762 figure — and the credit enhancement supporting the A tranche is smaller. This is counterbalanced by the fact that the collateral in Honda’s transaction has more seasoning — 12.99 months vs. 8.67 for Nissan and 8.46 for Volkswagen — and the remaining term of the loans is shorter than in the other deals.