Auto ABS

The deal is secured by loans on new and used vehicles and that largely follows the structure of recent transactions, particularly the 2021-C.

This deal appears to be the first since the Netherlands-headquartered multinational acquired First Investors in an all-cash transaction finalized last November.

The collateral pool is comprised of receivables assets based in Japan, and several classes of the transaction will issue dollar-denominated notes.

RAC Asset Holdings, a related entity, has been purchasing older vehicles with more mileage, and spent more on reconditioning, to make up for the squeeze on supply of vehicles.

The collateral of CPSART 2022-A reflects key changes including a decrease in the percentage of called collateral, and a drop in the months of seasoning on the notes.

The main risk to the repayment of notes is that Hertz will not be able to recoup enough funds, through used vehicle sales, to fund the payments to bondholders.

While the mix of vehicle types in GMF originations is shifting, Chevrolet remains the top vehicle make in the 2022-1 deal, comprising about 57.5% of the pool.

ABS issuance performance is largely neutral, with exceptions for stepped up volume, including auto. Inflation and COVID-related risks could overhang the industry.

Increased subordination and initial hard credit enhancement throughout the tranches, plus a slightly higher borrower profile help bolster the credit on the notes.

The initial principal note balance could be either $1.3 billion or $1.8 billion in notes the Volkswagen Auto Loan Enhanced Trust (VALET).

The deal’s sponsor has issued a small rated portion to investors and sold the remainder back to loan-originator.

Hertz Global Holdings Inc.’s $4.2 billion deal with Tesla Inc. is about more than just an order for 100,000 cars. It’s about vaulting electric vehicles into the mainstream.

The deal is fortified with collateralization, subordination and reserve accounts throughout the capital structure to get most of the notes to top ratings.

The supply chain crunch appears to be reflected in this deal, which has the smallest collateral pool of lease contracts since 2019, at 35,020.

Chapter 7 and Chapter 13 make up about 48% and 31% of the borrowers in the pool, respectively, while non-bankruptcy borrowers make up 21% of the pool.

Auto loan delinquencies and defaults had performed well thanks to federal intervention. Analysts expect them to return to historic levels, and then stabilize.

All of the underlying leases are financing new cars, Fitch noted, adding that leases under 36 months for the original term represented about 82.3% of the pool.

World Omni Financial Corp. is returning to the auto-loan ABS market with a jumbo transaction backed by collateral of higher credit quality than other similar deals.

From the interest rates on the underlying vehicle leases to the benchmark and hedges on the notes issued from the trust, the deal has no Libor exposure.

In a first for the EART program, the collateral will include loans originated through a third-party direct lender.