After 200 years in business, Bank of Montreal will issue its first-ever retail auto securitization, valued at more than $654 million.
The transaction — Canadian Pacer Auto Receivables Trust 2017-1 — is backed by prime retail installment auto loan contracts with an average weighted Fico score of 752 and a weighted average seasoning of 22 months, according to a pre-sale report from Moody’s Investors Service.
Additionally, 34% of the vehicles in the ABS pool are new and 66% are used, with cars and SUVs making up 74% of the securitization and other types of vehicles making up the remaining 26%.
The weighted average original term of the pool is 64 months, which Moody’s notes is lower than other recent Canadian public transactions. “Eligibility criteria restrict the original term of the loans to no more than 72 months,” Moody’s said in the report. “Longer term loans in the prime segment generally have weaker performance compared to loans with shorter original terms.”
However, a possible challenge is the overall Canadian economy, which “has picked up over the last few quarters,” according to the report. But “headwinds remain due to low oil prices, NAFTA re-negotiations, and uncertainties related to future U.S. policy direction.”
Established in 1817, Bank of Montreal employees 45,000 employees, and offers indirect auto loans for purchase of new and used vehicles and light trucks through arrangements with over 3,500 auto dealerships. The bank also maintains a strategic partnership with an OEM to facilitate subvented loan financing for dealership customers.
For more content like this, check out the 17th annual Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.
