Mercedes-Benz Financial Services has issued its first securitization backed by $1.24 billion of vehicle loans this year — with the option to upsize to $1.5 billion, according to a presale report from S&P Global Ratings.
The MBART 2016-1 transaction is comprised of prime auto loans with a minimum Fico of 651; in fact only 18.6% of the loans have a Fico lower than 700, according to S&P. However, the average LTV — at 116% in the 2016-1 trust — has been increasing steadily since the 2011-2012 issuances, when the LTVs were below 99%.
“We believe the higher percentage of pre-owned vehicles, combined with more longer-term loans, is propelling the increase in the weighted average LTV,” S&P wrote in the report. However, the agency also determined that, based on origination static pool data, loans secured by pre-owned vehicles perform better than new vehicles, within the same original term and Fico bands.
If upsized, collateral characteristics such as minimum credit scores, average LTVs, and average seasoning — currently at 15.4 months — remain unchanged.
MBFS total delinquencies rose to 1.18% by June 30, compared with 1.08% from the same time a year prior, while annualized net losses increased to 0.29%, from 0.19% a year earlier. However, despite slightly weaker performance metrics for the six months ended June 30, compared with the same period last year, performance metrics remained “relatively low,” according to the rating agency.
Although MBFS issued its first lease securitization in March, MBART 2016-1 is the first loan-backed issuance from the captive this year, and eighth prime loan securitization over all.
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