World Omni Preps its Annual Auto Lease Securitization

World Omni Financial Corp. is making its annual trip to the securitization market with auto leases.

The $748.73 million World Omni Automobile Lease Securitization Trust 2016-A will issue an $89 million money market tranche and three classes of senior notes with preliminary ‘AAA’ ratings from Fitch Rating. All four tranches benefit from 17.65% credit enhancement. There is also a subordinate tranche provisionally rated ‘AA’ with 13.65% credit enhancement.

Bank of America is the lead underwriter.

The notes will be backed by a pool of closed-end vehicle leases on new vehicles manufactured by Toyota Motor Corp. and originated by World Omni. The weighted average FICO score of the leases is 732, which Fitch noted is down from World Omni’s prior securitizations, but still prime quality. The base residual value percentage also declined marginally, to 68.95% from 69.52% in the sponsor’s previous deal.

The portfolio is slightly less concentrated in the two largest models, Toyota Camry and RAV4, which account for 39% of the total, compared with 45% for World Omni’s previous lease securitization. Both Camry and RAV4 models have produced low losses in residual value historically. While the lease maturities are heavily concentrated at the end of 2018 and first half of 2019, the overall portfolio has a weighted average original term of 37.6 months, in line with that of the previous deal.

Fitch expects cumulative net losses to be 0.85%, in its base case scenario. That’s in line with its expectations for the most recent lease securitizations from Nissan (0.90%) and Ford Motor Credit (1.0%)