Huntington National Bank and Gatewy One Lending & Finance are marketing auto loan securitization deals that offer investors bonds backed by prime and near prime loans.
Huntington plans to sell $750 million of securities backed by auto loan receivables in its first securitization of the year.
The transaction called Huntington Auto Trust 2015-1 will offer for tranches of class A notes rated by Moody’s Investors Service. The class A-1, money market notes, due June 2016, are rated Prime-1’, the class A2 notes due October 2017, the class A3 due September 2019 and A4 notes due June 2021 are rated Aaa’.
At the subordinate level the trust will offer $9.3 million of Aa3’ rated class B notes, $8.6 million of A2’ rated class C notes (both mature on June 2021) and $7.5 million of Baa2’ rated class D notes, due March 2022.
The loans included in the pool have an average balance of $20,206 and pay on average an annual interest rate of 5%. The loans have on average a term of 5.6-years and have on average paid 15 months of installments. Over half of the loans in the pool were used to finance used cars, 46% of the loans financed new cars.
Steve Steinour, chairman, president, and chief executive at Huntington announced, during the 3Q earnings call in October, last year, that the bank planned to issue two securitizations in 2015.
The issuer’s auto loan portfolio is comprised mostly of prime and super prime auto loans. In the first quarter of 2015, automobile loan originations grew by $2.0 billion, or 29%, making it the fifth consecutive quarter of gains greater than $1.0 billion in automobile loan originations for the issuer.
J.P. Morgan, BofA Merrill Lynch and Goldman Sachs are the lead managers.
Gateway One Lending & Finance is gearing up to issue $425 million of securities baced by a pool of prime and near prime loans.
The transaction, TCF Auto Receivables Owner Trust 2015-1, is the issuer’s second ever to be issued from the platform. Credit Suisse is the lead underwriter.
In its sophomore effort, the issuer has upped the risk profile of the underlying pool relative to its first transaction.
The percentage of borrowers with a lower credit profile, rated as tier 3, increased to 39.7% of the pool from 20.8% while the percentage of higher rated borrowers decreased. The weighted average FICO score decreased to 680 from 691.
Standard & Poor’s said that as a result it increased its expected cumulative net credit loss for the pool to 3.00%-3.30%, compared to the net loss range of 2.50%-2.80% for the TCF 2014-1 pool.
S&P has assigned rating of AAA’ to three tranches of class A notes, worth $319 million. The class A-2 notes are due August 2018, the class A-3 notes are dues December 2019 and the class A-4 notes are due November 2020. The transaction will also offer $61 million of money market notes rated A-1+’.
At the subordinate level, the transaction is offering $19 million of AA’ rated class B notes, due April 2021, $12.7 million of A’ rated. Class C notes fir July 2021 and $21.7 million of BBB’ rated class D notes, due March 2022.
As of March 31, 2015, Gateway's total managed portfolio of receivables outstanding was $4.1 billion, representing 52% year-to-year growth.