Auto ABS issuance will “rise only slightly,” or remain flat in 2015, according to a 2015 outlook released in mid-December by Moody’s Investor Services. Year-to-date auto ABS issuance topped $93 billion through November, exceeding the $88.7 billion of volume issued in 2013. Meanwhile, ABS credit quality will decline “modestly” compared with performance in existing securitized pools, as lenders gradually relax tight underwriting standards in light of the improving economy. Both prime and subprime lenders are expected to offer longer loan term contracts in 2015, Moody’s wrote. Santander Consumer USA and captives like Nissan Motor Acceptance Corp. have started to securitize loans with 75-month repayment terms, according to Moody’s, while Bank of the West, which issued its inaugural ABS deal in November, included loans with 84-month repayment terms. This makes it the first securitization to include loans with terms this long since before the financial crisis.
Ford Motor Credit Co. was the largest issuer of prime auto loan ABS this year, with five transactions totaling $7.3 billion, while SCUSA was the biggest issuer of subprime transactions, with five deals totaling $7 billion, according to Moody’s. While 2015 issuance will depend on the extent to which lenders with other sources of funding choose to turn to the ABS market, Reg AB II requirements for loan-by-loan disclosure “might cause issuers to flee the public markets temporarily as they improve their ability to report and disclose loan-level data,” Moody’s wrote.
