American Honda Finance Co. issued its third securitization of 2017, this time for $975 million dollars.
The captive’s first ABS was issued in January at $1.2 billion, and the second was issued in June valued at more than $1 billion.
Honda Auto Receivables 2017-3 Owner Trust is backed by prime auto loans with a weighted average Fico of 771, up from the captive’s previous transactions, according to a presale report by S&P Global Ratings. Honda’s January ABS had an average Fico of 766, and its June transaction Fico was 770.
“The more recent securitizations have a higher weighted average Fico score (generally in the 750-770 range), fewer used vehicles, and more seasoning,” S&P said in the report. “We believe pools with higher seasoning levels, all else being equal, will have lower loss rates. Honda’s outstanding securitizations from series 2014-3 through 2017-2 are performing with low loss levels.”
The pool also had an average term of 61 months and a weighted average seasoning of 13 months, according to the report. The average original loan financed was $23.9 thousand for the trust, as compared to $23.6 thousand in its January pool and $24.1 thousand in June.
Honda’s serviced portfolio consisted of contracts totaling $26.5 billion as of June 30, up approximately 2.9% from a year earlier. For the fiscal year ended March 31, annualized net losses as a percentage of the average principal were 0.36%, only eight basis points higher than those of a year earlier, according to the report. Also, total delinquencies remained relatively low at 0.98% at fiscal yearend, compared with 1.08% a year earlier.
“In our view, Honda’s transactions benefit from historically consistent underwriting policies and guidelines, strong collection and servicing practices, favorable recovery values, and high seasoning levels at deal inception,” S&P said in the report.
Honda did not respond to a request for comment by press time.
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