Mercedes-Benz Financial Services is marketing $800 million of triple-A rated bonds backed by financing for car dealer inventories, according to a presale from Fitch Ratings.
The notes, under the Mercedes-Benz Master Owner Trust label, are split evently between two series: the 2-year, Series 2015-A tranche and 3-year, Series 2015-B.
The notes benefit from 16.8% credit support, down from the 18.6% subordination level required for the AAA’ notes issued from Mercedes-Benz last dealer floorplan, the 2012 A/B series. The $700 million of AAA’ rated securities issued under 2012-A mature in November 2015, while 2012-B paid in full in November 2014.
The notes are backed by a revolving pool of dealer floorplan receivables from credit lines made by Mercedes-Benz to retail automotive dealers authorized by its parent company, Daimler AG, to sell Mercedes-Benz and smart brand vehicles, along with other original equipment manufacturers. Credit lines in the 2015-A pool finance mostly new vehicles. J.P. Morgan Securities is the lead manager.
Mercedes-Benz Financial Services’ floorplan portfolio has grown to $4.1 billion as of the end of 2014 from $1.5 billion in 2007. Fitch stated in the presale that the “success of recently launched models should bolster earnings in the next two to three years, but gaining market share will be challenging against key competitors BMW and Audi."