Westlake Flooring Master Trust is preparing to issue $230.9 million in securitized bonds to investors secured by auto dealer floorplan receivable from a diversified pool of dealers and manufacturers.
Although the pool is diversified, the transaction still must manage several potential challenges, including an interest rate mismatch between the underlying assets and the liabilities of the trust, a risk of comingling funds and the fact that some dealers are financially weaker, according to Moody's Ratings.
The transaction will issue notes through three class A and B tranches, Moody's said. According to the capital structure, the notes have a legal final maturity of Oct. 15, 2029. WFLOOR 2025-1 notes benefit from initial hard credit enhancement levels that represent 25.7% and 14.4% of the two class A tranches and the class B tranche, respectively.
Credit enhancement also includes a reserve account representing 1.00% of the note balance.
The deal's class A notes represent 75.3% of the pool, Moody's said.
WFLOOR 2025-1's pool differs from other auto floorplan dealers because of its dealer and manufacturer diversity, Moody's said. There are 4,573 dealer accounts, they have an average account balance of $107,255, which represents less than 0.3% of the total pool balance.
The deal's annualized monthly yield, which averaged 20% since 2018, has been consistently higher than most other dealer floorplan trusts that Moody's rates, the company said.
SMBC Nikko Securities America and MUFG Securities Americas are the deal's lead underwriters.
Moody's assigns Aaa to the A1 and A2 notes and A2 to the class B notes.
