Hyundai Capital America (HCA) is sponsoring an $898.6 million securitization of auto loans extended to prime borrowers, increasing its discount rate and enhancements to excess spread.
The discount rate on the current transaction, Hyundai Auto Lease Securitization Trust, 2023-A, is 10.60%, an increase from 9.00%. The change should offset expected higher debt issuance costs, while maintaining excess spread levels in the deal, according to a pre-sale report from S&P Global Ratings. The deal is expected to close at the end of January.
In other changes, the pool is leaning more toward leases with 31- to 36-month terms, at 85.62%, compared with 85.57%, in the HALST 2022-C transaction. Meanwhile leases with 37- to 42-month terms and 43- to 48-month terms decreased their percentages in the pool, according to S&P.
More Hyundai lease customers are leaning a little more heavily toward luxury, at least in this securitized pool. Genesis branded vehicles have a higher concentration of the pool's securitization value, at 6.27%, compared with 4.76%. Otherwise, the deal resembles Hyundai Capital America's previous deals, as well as peer securitizations with non-amortizing target credit enhancement tools.
In terms of HALST 2023-A's credit enhancement, S&P noted that the class A notes have a total initial hard credit enhancement level of 17.00%, and 12.25% of initial hard credit enhancement on the class B notes, S&P said. A 0.50% reserve account also helps provide initial hard credit enhancement.
HALST 2023-A also benefits from 4.75% subordination from the class B notes, and that level can increase as a percentage of outstanding securitization value. The class B notes will not amortize until the class A notes are paid in full, according to a pre-sale report form Fitch Ratings.
Overcollateralization, at 11.7%, provides some credit enhancement as well, and the deal will also use excess spread, building that up to 11.75%.
Fitch Ratings expects to assign ratings of 'F1+' to the class A-1 notes; 'AAA' to the A-2 through A-4 notes; and 'AA' to the class B notes. As for S&P, the rating agency intends to assign ratings of 'A-1' to the A-1 notes; and 'AAA' to the A-2 through A-4 notes; and 'AA-' to the class B notes.
The notes have legal final maturity dates ranging from Feb. 15, 2024 through April 15, 2027.
