Ally Bank has issued its first securitization transaction for the year, a $1 billion offering backed by prime auto loans, according to a presale report from Moody’s Investor Services.
The loans in the Ally Auto Receivables Trust 2015-1 (AART 2015-1) have a weighted average Fico of 746, a weighted average seasoning of 13 months, and a weighted average original term of 66 months. Moody’s cites a “high proportion of longer term loans” as a cause for concern in the presale, and reported that 66.53% of loans in the pool were originated with terms of more than 60 months, and 9.63% had terms greater than 72 months.
“Longer term loans in the prime segment generally have weaker performance compared to loans with original terms of 60 months and less,” Moody’s wrote in the report.
The ratings agency also cited the changing collateral mix of loan penetration with Chrysler and GM dealers as another cause for concern.
“Ally’s agreement to provide certain minimum amounts of subvened loans for Chrysler expired in April 2013,” Moody’s wrote. “And a similar agreement with General Motors after having been steadily reduced in recent years, terminated at the end of 2013. These subvened loans are typically of high credit quality and have contributed to lower losses in AART transactions throughout 2009-2012.”
The loss of the subvened loans — which typically carry interest rates below the prime lending rate — will result in AART collateral pools with increased used vehicles as a replacement for the lost subvention volumes, according to Moody’s. However, the weighted average Fico of the used vehicle portion of the pool is 740, compared to 749 for the new vehicle portion.
On another positive note, Moody’s said Ally has experienced continued low portfolio losses, and had an annualized net loss of 0.32% for the three months ended March 31. That’s higher than the annualized net losses from the same period a year prior, but low by historical standards, Moody’s said.
