Ford Credit Issues $1.3 Billion Securitization

Ford Motor Credit Co. LLC is heating up the securitization pipeline with a $1.3 billion offering backed by prime auto loans, according to a presale report from Standard & Poor’s Ratings Services.

The loans in the Ford Credit Auto Owner Trust 2016-B (FCAOT 2016-B) have a weighted average Fico of 732, a weighted average seasoning of 7.8 months, and a weighted average original term of 64.6 months.

This is not materially different from Ford Credit’s 2016-A issuance of more than $1 billion, which was backed by loans with an average Fico score of 734, a weighted average seasoning of 7.1 months, and an average loan term of 65 months.

“Ford Credit’s managed portfolio shows continued improvement in delinquency and repossession experience; however, its net loss experience show mixed results,” Standard & Poor’s said. The average number of delinquent contracts as a percentage of the average number of contracts outstanding were at 1.65% at the end of 2015, down from 2.05% at the same time a year prior. Repossessions as a percentage of the average number of contracts outstanding also decreased year over year to 1.12%, down from 1.22%.

However, “the average amount of net loss on charged-off contracts has steadily increased since 2013,” the report said. Net losses increased year over year from 0.33% to 0.38% for the year ended Dec. 31, 2015. This increase is attributed to higher balances at repossession, and “the calculation of net loss changed to include repossession expenses incurred before charge off, which increased the average net loss on contracts charged off,” Standard & Poor’s said.

Parent Ford Motor Co., said it will triple its autonomous vehicle test fleet this year, to 30 driverless hybrid sedans, in an effort to grow its Ford Smart Mobility initiative, aimed at developing and investing in mobility services across all of Ford’s businesses, including Ford Credit.

The transaction, which is expected to close tomorrow, is Ford’s third auto loan ABS issued under the Regulation AB II compliant retails shelf.