M&T Bank plans to issue its first ever auto loan securitization.
The $1.4 billion deal is backed by prime quality retail auto loan contracts originated by the regional bank, according to a presale report published today by Moody’s Investors Service.
Moody’s cites among the deal’s strengths the strong credit quality of the pool, which has a weighted average FICO of 729, a weighted average loan-to-value ratio of 105.2%. The percentage of new vehicles is 33.4% and the weighted average original term of the 2013-1 pool is 68.0 months and the weighted average seasoning is 17.7 months.
The agency sees M&T’s lack of securitization experience as a cause for concern, however. Bank has over 50 years’ experience in originating and servicing auto loans. Nevertheless, the fact that it has never sponsored a securitization “introduces uncertainty with respect to how this transaction will perform relative to the M&T Bank managed portfolio,” Moody’s said.
The agency said the pool has a high regional concentration: over 60% of the 2013-1 pool is originated from New York and Pennsylvania. This concentration “introduces volatility to the loss expectation to the extent that weak economic conditions prevail in this region,” it said.