Hyundai Issues First ABS with Longer Loans After Extending Terms in 2014

Hyundai Capital America (HCA) came to market with a $1.17 billion offering backed by prime auto loans, according an S&P Presale report last week. The Hyundai Auto Receivables Trust 2015-B (HART 2015-B) — which has an expected closing date of April 22 — is the second loan securitization offering for the company this year, but the first with 73-to-75 month auto loans, according to S&P.

The 2015-B pool contains approximately 5% of collateral with 73-month to 75-month original terms. HCA began originating collateral with these longer terms in late 2014, but this is the first time that it has securitized these originations, according to the report. However, S&P doesn’t seem to anticipate greater risk in the performance of the longer loans.

“Their weighted average Fico score is 777, compared with 743 for the rest of the collateral and 745 for the whole pool. Since Hyundai did not begin originating these loans until late 2014, no performance data are available,” S&P wrote. “Still, these loans are only one to three months longer than Hyundai’s 72-month loans.”

The 73-to-75 month loans in the 2015-B trust also already have three to four months seasoning, as well as the highest weighted average Fico score of Hyundai’s securitizations, according to the report, and the lowest weighted average LTV ratio since the 2011 vintage.

“Therefore, we expect the performance of the 73-75 month term loans to be at least in line with that of the 61-72 month term loans,” S&P wrote.

Other changes include a lower weighted average seasoning in the 2015-B trust of 6.4 months, down from 8.4 in the 2015-A trust, and a slightly higher weighted average Fico score of 745, up from 743.

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