Auto dealer floorplan receivables will secure about $382.17 million in asset-backed securities, its first securitization for 2024, and sixteenth term transaction overall from the NextGear Floorplan Master Owner Trust, 2024-1.
Some 14,345 dealer accounts compose the collateral pool, according to ratings analysts from Moody's Investors Service, which introduced plenty of diversification. On average, the accounts have a balance of just over $195,110, amounting to less than 0.01% of the total pool balance, according to Moody's.
Mizuho Securities is the lead underwriter on the deal, according to Moody's. Mizuho is also a manager on the deal, in a role that includes
Diversification is just one of the deal's several credit strengths, which includes higher excess spread than comparable floorplan transactions. The largest dealer accounts for 0.72% of the total pool balance and the top five dealer accounts represent 2.53% of the total pool, according to Moody's.
The NextGear Floorplan Master Owner Trust program has another key advantage, which is a higher average excess spread compared with other floorplan trusts sponsored by its rated captive lenders. Cox Enterprise, which is NextGear's parent, provides a performance guarantee on the servicing obligations, helping to mitigate risks of deteriorating performance resulting from any event that would limit the trust's ability to service the pool, Moody's said.
Yet another difference from other auto floorplan transactions is that NextGear's collateral pool is composed of assets from a well-diversified group of manufacturers, Moody's said. As of the deal's cutoff date, the top seven manufacturers accounted for about 52.77% of the total trust, the rating agency said.
NextGear's capital structure indicates that it will issue classes A and B notes from three tranches. All of the notes have the same expected maturity date, March 15, 2029, and a legal final maturity date two years after that, according to Moody's.
Total initial hard credit enhancement amounts to 22.50% on the A1 and A2 tranches, Moody's said. The single tranche of class B notes enjoys initial hard credit enhancement of 15.00%. The notes also benefit from a $53.5 million subordination tranche, representing 14.00% of the balance, the rating agency said.
Moody's expects to assign ratings of Aaa to the A1 and A2 notes and A1 to the B notes.
