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Socram Banque returns with €486.5M French auto loan ABS

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Socram Banque, a specialty lender to clients of major French mutual insurance companies, is selling €486.5 million in bonds backed by prime auto, motorcycle and recreational-vehicle loans.

The bonds are being marketed through a 12-month revolving securitization, TitiSocram 2017, which will issue all the notes through a Class A series senior-note tranche with 8.4% credit enhancement and preliminary triple-A ratings from Fitch Ratings and S&P Global Ratings.

The notes, to be issued by the France Titrisation trust, are expected to price at 45 basis points over the one-month Euribor rate (currently negative at -0.373%, as of Tuesday). The deal was arranged by Natixis, which is co-lead managers with Société Générale and BNP Paribas.

The portfolio involves 54,347 prime receivables from loans originated since 2015 primarily for new and used cars (92.9% of the pool). The loans have an outstanding principal balance of €486.5 million.

Nearly two-third of the loans (63%) are for used vehicles with an average balance of €8,071. New cars average €10,998; both types are being pooled with low LTV levels averaging 83.3% for used cars and 75.1% for new vehicles.

The loans were originated and are serviced by Socram Banque at average interest rate of 3.2%. Because of the mismatch of fixed-rate loans with the floating-rate bonds, the TitriSocram 2017 trust – Socram’s ninth overall securitization – has entered into swaps arrangements with Natixis and Société Générale.

Fitch set a base-case default assumption of 1.5% to the portfolio. S&P has a 2% default rate assumption on the car loans – combining the 1.4% for new-car loans and 2.2% for used cars.

Socram Banque is expected to add new loans to the pool over the next year that meet asset collateral criteria, such as a minimum 2.5% interest rate and a remaining maturity of at least 12-84 months for non-recreational vehicles.

Socram Banque is owned by eight mutual insurers, and exclusively underwrites loans through 1,700 points of sale to the clients of its shareholders totaling 11.8 million French households. The company has one outstanding securitization (TitriSocram 2015), a €510 million private auto loan-backed deal.

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Auto ABS Fitch S&P Natixis BNP Paribas Societe Generale Socram Banque Europe France