Nissan Chinese Captive Issues First Securitization of 2018 Amid Bull ABS Market

Dongfeng-Nissan Auto Finance Co. (DNAF) released its first securitization of 2018, and just as the China ABS market is heating up, according to Moody’s Investors Service.

The portfolio consists of renminbi-denominated floating-interest-rate auto loans granted by DNAF to private individuals in China. The renminbi is the official currency of China and converts to a portfolio balance of around $706 million. The portfolio is collateralized by new cars produced or imported by Dongfeng Nissan, Nissan China, Dongfeng Infiniti, Dongfeng Venucia, Zhengzhou Nissan, Dongfeng Renault, and Renault (in Beijing).

The portfolio is “highly granular,” according to the Moody’s report, consisting of 60,354 performing loans selected from the originator’s portfolio. “Typically, a more granular pool exhibits a less volatile performance.”

Roughly 23.2% of the pool are loans made to borrowers located in Guangdong Province. Additionally, 92.5% of the loans in the portfolio have a minimum down payment of 20%. The weighted-average down payment rate of the pool is about 29.4%.

“Typically, borrowers are less likely to default on loans where significant equity has built up in the underlying vehicle via down payments,” Moody’s wrote in the report.

Separately, Moody’s Investors Service reported on Wednesday that the issuance of Chinese securitization transactions for all asset classes rose in the fourth quarter of 2017 compared with a year ago, both in terms of number of deals and value, while loan performance was steady. Twelve auto loan ABS transactions with a total portfolio of 49.4 billion yuan (approximately $7.77 billion USD) were issued in 2017, five transactions more than the same period in 2016.

DNAF, which is the originator and servicer, is a joint venture that is — through direct and indirect ownership shares — 58% owned by Nissan Motor Co. Ltd. and 42% owned by Dongfeng Motor Group Co. Ltd. DNAF was established in 2007 and has issued seven China auto ABS transactions since 2014. DNAF uses a comprehensive set of data and database searches to assess borrower credit profiles and determine an internal credit scorecard.

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