Auto ABS

FHF sources almost all its loans—most recently 96% in 2024—from franchise dealers.

The deal is structured as a public securitization, under Rule 144A, and is supported by lending indirectly through more than 1,100 partnerships across the country.

The United Auto 2025-1 series of notes has a more mixed subordination element compared with the previous deal.

GM Financial Revolving Receivables Trust, 2025-1 has a five-year-long revolving period, risking exposure to assets with longer terms.

The deal also offers a subordination piece that represents 14% of the pool balance, helping to boost the credit to the notes.

Uncertain economic impact from government actions could drive disruptions

Aside from the assets' credit quality, the bank's 60 years of experience originating and servicing auto loans is a boost to the notes' credit.

Borrowers in GCAR 2025-1's underlying collateral pool have a slightly lower FICO score than the GCAR 2024-4 deal, and they bought more new cars.

All the class A notes benefit from total initial hard credit enhancement totaling 21.0% of the pool balance. Classes B, C and D benefit from 17.0%, 11.5% and 6.5%, respectively.

The GMALT 2025-1 securitization has just 24.4% of contracts with original leases longer than 36 months. It's the lowest level for the platform, a credit positive.

Called collateral from various series increased to 6.0%, from 4.0%, while weighted average seasoning increased to 3.15 months from 2.82 months.

In a few notable changes from the 2024-1 deal, 0.73% of the current pool is composed of closed-end leases, an increase from 0.55%.

Despite Exeter's experience, it has low durability as a servicer. This puts its default probability in the unknown.

ODART 2025-1 will be the first transaction from the program that will include loans originated through OneMain Foursight, the lending unit that was formed when OneMain bought Foursight Capital from Jefferies Financial Group.

Notes will be repaid through a sequential pay structure that will require principal to be repaid in full to the class A1 notes.

In both scenarios of the 2025-1 series, the capital structure will issue notes through about eight tranches, including an overcollateralization piece representing 5.15% of the pool balance.

Structurally, the GSAR 2025-1 transaction has 22.5% in subordination for the class A notes, down from 22.8% seen on the GSAR 2024-4 deal, and pre-pricing excess spread fell to about 7.8% of the outstanding balance, from 8.9%.

The auto ABS deal can be upsized to $1.5 billion, and most of the notes benefit from credit enhancement equaling 6.10% on most of the notes.

GFORT 2024-4 has an interest rate mismatch between the assets and the issued notes, which could reduce excess spread in the trust to the point where it is negative.

Some recent performance deterioration in Volkswagen's managed portfolio vintages and securitization pools helped account for the increase in expected CNL losses.