Hyundai Capital America is driving auto lease ABS volume by bringing $1 billion of receivables to market, according to a presale report from S&P Global Ratings. Total auto lease ABS volume is expected to hit $22 billion by yearend.
HCA’s securitization — the first captive to inject lease ABS volume this year — consists of 53,957 prime auto lease receivables, a 23.8% increase compared with the lender’s first transaction last year.
A decline in used–car prices is a risk factor for HCA’s first ABS deal of the year, according to a Moody’s Investors Service presale report. “Used–car prices are still at risk of falling as large volumes of leased vehicles reach the end of their term,” Moody’s noted. “Falling used–car prices would expose the transaction to a lower recovery rate on defaulted loans and lower resale values on vehicles turned in at lease-end.”
HCA’s managed lease portfolio decreased 4.5% year over year in the third quarter of 2019, to $15.94 billion.
Looking ahead to yearend 2020, auto loan and lease ABS volume is expected to reach roughly $104 billion despite the likelihood of new issuers coming to market, according to S&P. ABS volume was robust last year, with $111.2 billion in issuance, outpacing $104.5 billion recorded in 2018.
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