General Motors Financial Co. is extending fewer longer term leases, according its first auto lease securitization this year.
The $1 billion asset-backed transaction — GMALT 2016-1 — consists of 34% of leases with an original term of 36 months or less, compared to 27.8% in the captive’s previous transaction, according to a presale report from Standard and Poor’s Ratings Services released last week.
The share of leases with original terms of 37 to 48 months decreased to 66% accordingly, down from 72.3% previously.
“We view this favorably because 48-month leases typically have higher credit losses than 36-month leases,” the report said.
Additionally, the weighted average Fico score in the transaction increased to 751, up from 745 in the previous GMALT transaction.
Earlier this month, during the company’s fourth quarter 2015 earnings call, the GM’s Chief Financial Officer Charles Stevens, said that he does not foresee any burgeoning issues with deteriorating credit in the space.
“The credit metrics are stable and performing, frankly, better than prior to the last downturn,” he said. “We’ve just not seen anything from a fundamentals perspective that would support that a significant downturn is imminent either from an industry standpoint or from an overall economic standpoint.”
