CarMax, Mercedes-Benz, Toyota drive up ABS volume

Auto asset-backed securities volume has already outpaced last January’s levels, reaching $5.8 billion as of Jan. 17, a 9.4% increase compared with the prior-year period, according to JP Morgan Securities.

A handful of lenders — including CarMax Auto Finance, Consumer Portfolio Services, Exeter Finance, GM Financial, Hyundai Capital America and Santander Consumer USA — bolstered auto ABS volume in January, nudging auto loan and lease ABS volumes past last year’s levels.

The ABS market for auto loans and leases is expected to reach roughly $104 billion by year-end 2020, a drop from year end 2019, with $111.2 billion in issuance, according to S&P Global Ratings.

CarMax Auto Finance led the pack at the beginning of the month, bringing $1.5 billion of prime auto loan receivables to market. Meanwhile, GM Financial issued $1.2 billion in bonds backed by prime auto loan receivables. On the nonprime side, Santander Consumer USA issued $1.3 billion for its first transaction of the year.

On top of that, the latter half of January — after the Jan. 18 — saw seven more issuers funnel a combined $6 billion of issuance to market.

On the lease side, Mercedes-Benz Financial Services takes the top spot for the largest volume with a deal consisting of $1.3 billion in prime lease receivables. Further, Ford Credit and Nissan Motor Acceptance Corp. both issued $1 billion in bonds backed by prime leases. Auto lease ABS volume is expected to hit $22 billion by year-end, according to S&P.

As for prime loans, Toyota Motor Credit Corp. issued $1.3 billion in prime loan receivables. Strong investor demand may upsize the transaction to $1.8 billion. Bank of Montreal’s Canadian Pacer Auto, meanwhile, brought $605.2 million in prime loans to market — the lender’s first issuance since April 2019. For subprime, American Credit Acceptance, DT Auto and GLS Auto issued a combined $1.1 billion backed by subprime loans.

Despite expectations that more credit unions will enter the capital markets space in 2020, no credit unions have closed ABS deals this year — yet.

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