Prime auto ABS

Fitch says credit quality in the California-based bank's auto-loan originations have deteriorated slightly with more exposure to near-prime borrowers.

Toyota Motor Credit Corp. is debuting a new revolving ABS platform to securitize a large portion of six-plus year term loans excluded from its standard prime-loan securitization shelf.

The $1.11 billion Ally Auto Receivables Trust (AART) 2019-2 deal has three classes of senior term notes with early AAA ratings by S&P Global Ratings and Fitch Ratings.

S&P Global Ratings reports that cumulative loss levels on collateralized portfolios of subprime auto loans fell to 7.11% in March, compared to 8.67% in February. That figure was also down from 7.61% in March 2018, and the lowest since 2016.

Both transactions are the second this year for each of the automotive captive-finance firms, and will build on a tally of 19 prime auto loan ABS pools to date this year totaling $21.44 billion.

The lender has not sponsored an asset-backed transaction since 2007, according to presale reports.

Toyota Motor Credit is planning its second deal of the year, while Fifth Third is returning to the securitization market for the first time since 2017.

Recent transactions have been performing better than expected; S&P Global Ratings has set its expectations for cumulative net losses for COAT 2019-2 accordingly lower.

At 1%-1.2% of initial principal balance, the expected loss range for the $1.25 billion deal is the lowest ever for a GM Financial retail auto loan securitization.

The captive-finance lender's focus on higher-FICO borrowers since 2016 has "manifested" in ABS loss and delinquency improvements.