In an environment where the market is on guard for rates that eat into excess spread, NextGear Floorplan Master Owner Trust is offering investors high excess spread on its $382.1 million in securitized notes.
The NFMOT 2025-1 transaction is preparing to sell notes from dealer floorplan receivables on autos and light-duty trucks. Three tranches of class A and B notes will be offered, which are expected to mature on Feb. 15, 2028, with a legal final maturity set for two years later, according to Moody's Ratings.
The deal also offers a subordination piece that represents 14% of the pool balance, helping to boost the credit to the notes, Moody's said. S&P Global Ratings says the current deal, which closes on March 11, bears no material changes from the series 2024-2 deal. Credit enhancements, concentration limits and trigger level all stayed the same, the rating agency said.
Moody's notes that NextGear's excess spreads averaged 14% since 2009, consistently higher than other dealer floorplan trusts from captive lenders. A cash reserve also shores up credit to the notes, says Moody's.
RBC Capital Markets, Mizuho Securities and MUFG Securities are the initial note purchasers and managers.
The collateral pool has 14,519 accounts, the highest number compared with other floorplan deals, and its pool balance is on the lower end. All the used vehicles, which have an average balance of $209,849 Moody's said, with a weighted average (WA) rate of 12.4%. The pool is fairly diversified by manufacturer and geographic location. Ford, Chevrolet, Toyota, Mercedes Benz and Ram account for 14.3%, 11.8%, 8.3%, 4.9% and 4.9% of the pool balance, respectively.
Geographically, contracts distributed to California , Texas, Florida, Arizona and Georgia account for 17.7%, 14.2%, 9.9%, 4.1% and 4.1% of the pool, respectively.
Moody's assigns Aaa to the A1 and A2 classes and A1 to the class B notes. Also, S&P Global Ratings gives AAA to the A notes and A to the class B notes.
