Mercedes-Benz is planning its first auto loan securitization of the year, according to a presale report published today by Fitch Ratings.
The $1.124 billion Mercedes-Benz Auto Receivables Trust 2014-1 is backed by a pool of retail installment sales contracts secured by new and used Mercedes-Benz and Smart automobiles and sport utility vehicles originated and underwritten by MBFS, a wholly owned captive finance subsidiary of Daimler AG.
The trust will issue a $295 million money market class with a preliminary F+’ rating and three classes of notes with preliminary AAA’ ratings: $343.1 million due in February 2017, $375.87 million due in October 2018 and $110.5 million due in November 2020. All four tranches benefit from credit enhancement of 2.75%.
Deutsche Bank is the lead underwriter.
The weighted average FICO score of the borrowers in the pool is 767, which Fitch said is consistent with recently issued MBART transactions. However, the concentrations of used vehicles increased to 72.43% from 61.38% in the most recent deal, completed nearly a year ago, in July 2013, representing the highest level in any MBART transaction to date.
The increase in used vehicles has resulted in a higher weighted average loan-to-value (LTV) ratio for the 2014-1 pool, which Fitch said could result in higher loss severities on defaulted loans.
While this is Mercedes’ first auto loan securitization almost 12 months, the automaker has completed two auto lease deals in the interim, one in April 2014 and one in November 2013.