Mercedes-Benz Auto Lease Trust is preparing to sell $1.15 billion in asset-backed bonds to investors, in a deal that could be upsized to $1.45 billion.
Ratings analysts at both Moody's Investors Service and Fitch Ratings assessed the notes, all of which are class A, but neither assigned ratings to the A1 notes, according to their pre-sale reports. Mercedes-Benz Financial Services (MBFS) is sponsoring the deal, its first of the year, after sponsoring about 20 previous transactions, according to Moody's.
As of Dec. 31, 2023, according to Moody's, the portfolio's delinquency rate was higher than the rating agency had observed in previous MBFS-sponsored transactions dating back to 2019, but it was still extremely low, at 1.46%. All of the notes have total initial hard credit enhancement of 12.5%, and an initial overcollateralization level of 12.25%, according to both agencies. Moody's also points out that the notes benefit from an initial reserve of 0.25%.
Tranches A-1, A2A and A2B, A3 and A4 have legal final maturity dates of June 2025, February 2027, January 2028 and February 2030, according to the rating agencies.
Fitch notes that the assets in the collateral pool have a FICO score of 787, which was up a few notches from the 780 seem in the 2023-A series. Also on a WA basis, the vehicles in the pool, 90% of which are new, have an original term of 42 months, with 10 months of seasoning.
Mizuho Securities,
There is a fair amount of concentration in the pool, Fitch notes, as the top five car models represent 63.5% of the pool. Sport- and crossover-utility vehicles make up a slight majority of the pool, 54.2%, while cars account for the other 45.8%, Fitch said.
Moody's notes that the base collateral pool contains 20,735 contracts, with a base residual percentage of manufacturer suggested retail price (MSRP) of 45.03%.
Moody's assigns Aaa to the A2 through A4 notes; and Fitch assigns AAA to the same notes.
