Stellantis Financial Services is preparing to sell $894 million in asset-backed securities (ABS) from a pool of retail installment auto-loan contracts that it originated to borrowers considered prime.
SFS Auto Receivables Securitization Trust, series 2025-3, is another 144a auto loan ABS deal from Stellantis, and offers investors collateral that is stronger than the of last two offerings this year, according to Moody's Ratings.
Deutsche Bank Securities, RBC Capital Markets and Mizuho Securities are lead underwriters on the deal, which will sell notes to investors through six tranches of A, B and C notes. The notes have maturities ranging from Oct. 20, 2026 on the A1 tranche to Nov. 21, 2033 on the class C notes, according to Moody's.
Classes A2 and A3 hold the bulk of the securitized amount, with $680 million combined. All the class A notes benefit from total initial hard credit enhancement levels representing 13.25% of the pool balance. Classes B and C are offered total initial enhancement levels of 9.80% and 5.25%, respectively.
Credit enhancement, which builds over time, also includes non-declining overcollateralization at 5.00% of the initial adjusted pool balance, and a reserve fund that represents 0.25% of the note balances in the tranches, Moody's said.
Stellantis has an experienced management team in auto financing, and the underlying pool, made up of 18,281 contracts, has borrowers with a weighted average FICO score of 764, which are among the deal's credit strengths.
The pool is also composed of mostly new cars, 84.1%, Moody's said.
Despite Stellantis's strength, there are a couple of drawbacks that could impact the deal's credit. For one, rating agencies have performance data for its managed portfolio only back to Q2 2022, relatively short compared to other auto ABS issuers.
Moody's assigns ratings of P1 to the A1 class; Aaa to classes A2 through B; and A1 to the class C notes. S&P Global Ratings, which also assessed the notes, assigns A1+ to the A1 notes; AAA to classes A2 through A4; BB to the class B notes; and A to the class C notes.
The deal is slated to close on October 15.
