Ford Credit Canada is pooling CAN$614 million (US$492.5 million) in domestically issued prime auto loans in its second retail securitization this year in the Great White North.

The collateral in Ford Auto Securitization Trust (FAST) Series 2017-R5 includes both new and used vehicles – mostly its popular line of light-duty trucks – financed through franchised Ford dealers by the automaker’s Canadian captured finance subsidiary.

The notes being issued, totaling CAN$529.85 million, include three series of senior notes: a two-year, $168 million Class A-1 tranche; a Class A-2 tranche totaling $218.4 million, due 2021; and $116.96 million in Class A-3 notes due 2023.

All of the notes have preliminary triple A ratings from S&P Global Ratings and DBRS.

Bloomberg

The notes benefit from 8.05% credit enhancement consisting of a 5% subordination of the Class B ($15.8 million of the pool) and C ($10.6 million) notes; a 1.5% initial overcollateralization; a 1% non-amortizing cash-reserve account; a 4.05% excess spread via a yield-supplement overcollateralization account totaling $84.2 million (or 7.7%, an increase from 7.1% from Ford Canada’s previous FAST 2017-2 transaction).

Ford brands have a leading sales market share of 15.5% in Canada, according to DBRS. The automaker’s sales in Canada are up 3.1% year-over-year, as of September.

According to presale reports, the collateral features a slightly higher average borrower FICO (756, up from FAST 2017-R2’s collective 754), with over 58% of the pool with FICOs above 700. But original terms of 69.1 months among the 15,699 loans in the pool are up slightly from 68.3 months from the prior deal.

There are also a higher percentage of loans (67.5%) over five years than in previous FAST transactions, according to by DBRS. However, Ford Credit Canada “typically underwrites to higher credit quality customers for its 84-month contracts,” according to DBRS. The loans have 7.2 months of seasoning.

The weighted-average loan-to-value ratio of the pool is 107.5%, up from 106.9%.

Light trucks, which have had a sales increase of 9.3% in the first three quarters of the year in Canada, represent 90% of the portfolio, as in previous FAST transactions.

S&P estimates a cumulative net loss of 1%-1.2% from the pool.

The deal is being placed by RBC Securities, Scotia Capital, CIBC World Markets, TD Securities and BMO Nesbitt Burns. The deal is expected to close Oct. 24.

Ford Credit Canada in July issued its first dealer floorplan financing securitization in four years.

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