Honda Finance injects $1B into ABS market

Photographer: Toru Hanai/Bloomberg

Loans in American Honda Finance Corp.‘s latest securitization have the shortest original and remaining terms when compared with other issuers’ pools, according to a Moody’s Investor Services presale report. The $1.1 billion securitization is on track to be upsized to $1.3 billion based on investor demand.

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The loans backing Honda’s securitization — its third of the year — have a 62-month original term and a 49-month remaining term, on average. By comparison, the original and remaining terms were 66.4 months and 55.2 months, respectively, for Nissan Motor Acceptance Co., Toyota Financial Services, Hyundai Capital America, Ford Credit Co., and GM Financial, according to the report.

In fact, AHFC’s vintages from 2015 to 2018 all have cumulative net losses (CNL) hovering between 2% and 3%, the lowest rate compared with other companies’ vintage securitizations. Forecasted CNL for this securitization is 0.50%, the same as Honda Finance’s second securitization this year.

Read more: Honda Finance’s Late-Stage Delinquencies Rise

Meanwhile, AHFC’s auto portfolio increased 6.6% year over year in the second quarter, to $30.4 billion. Net losses increased 2 basis points, to 0.36 as a percentage of total outstandings.

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