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Nissan mulls another upsizing in next $1B U.S. auto lease securitization

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Nissan Motor Acceptance Corp. will weigh another potential upsizing in its next vehicle-lease securitization.

According to presale reports from Moody’s Investors Service and S&P Global Ratings, he captive finance lender's for Nissan North America plans either a $1 billion or $1.25 billion offering of notes backed by the securitized collateral value lease receivables contracts and end-lease vehicle values provided in the pools for Nissan Auto Lease Trust 2019-B.

The smaller pool is backed by $1.2 billion in the lease payments and expected residual value for 58,755 leased vehicles. If upsized the collateral would boost to $1.5 billion from 75,534 leases. (NMAC’s previous deal this year involved an upsizing to $1.25 billion.)

The average securitization value is $20,495 for the $1 billion pool, with weighted average original terms of 37 months and seasoning of 12 months for both pools. Over 77% of the leases are 36 months or less, similar to prior deals.

Among changes from NMAC’s previous transaction is a slightly higher weighted average FICO of 760, a slight increase from NALT 2019-A. Nissan also is including more Infiniti-branded vehicles – 22.7% of the pool compared to 21.3% in the prior transaction. (Infiniti vehicles have trended lower credit losses than Nissan vehicles, according to S&P.)

Nissan boosted its lease originations to its “tier 1” obligors to 58.4% from 57.5%. The average base residual value of the vehicles is higher as well at $13.955, compared to $13,607 in the prior deal.

Leases for the Nissan Rogue crossover makes up 19.42% of the pool, representing the top model concentration.

The senior notes receiving preliminary triple-A ratings from S&P and Moody’s benefit from 21.9% credit enhancement. That includes $415 million (or $519 million if upsized on the July 24 closing date) in Class A-2 notes due October 2021 – split between fixed- and floating-rate tranches; a Class A-3 tranche due July 22 sized at either $365 million or an upsized $456 million; and an $85 million or $106 million Class A-4 tranche due April 2025.

Nissan will market $135 million or $169 million in short-term money-market notes, as well. Those notes have each agency’s top short-term one-year rating of P-1 from Moody’s and A-1+ from S&P.

Nissan Motor Acceptance Corp. SG Americas Securities is the lead underwriter on the deal.

As of March 31, NMAC had 870,539 contracts totaling $21.4 billion. Total delinquencies remain flat at 1.01%.

S&P assumes a 0.8% net loss on the transaction, while Moody’s estimates a 0.5%.

This is Nissan’s 27th auto lease ABS term transaction.

NMAC has added contract language that would replace the one-month Libor-based benchmark rate for the deal’s floating-rate notes with an alternative benchmark, should Libor cease being available during the tenor of the transaction. Like Ford Motor Credit, NMAC is opting for “fallback” language to adopt the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve of New York, as recommended by the Alternative Reference Rate Committee, a public-private working group established by the Federal Reserve Board of Governors and the New York Fed.

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