Auto ABS Heats Up With $3.2B of Issuance
A trio of securitizers pumped up ABS volume last week, bringing year-to-date issuance to $64.5 billion, according to Deutsche Bank.
Nissan, Mercedes-Benz, and CarMax combined for $3.21 billion of issuance last week, according to rating reports by S&P Global Ratings and Moody’s.
Nissan Motor Acceptance Corp. completed its second auto loan transaction of the year, a $1.13 billion deal.
The Mercedes-Benz securitization marks the captive’s first transaction for since 2016 — and its ninth prime auto loan securitization since 2009. Strong investor demand may upsize the transaction to $1.38 billion from $1.01 billion.
CarMax Auto Finance, meanwhile, issued its third securitization of the year. The transaction may be upsized to $1.43 billion from $1.20 billion, depending on market conditions. S&P Global’s expected loss range for the series 2018-3 pool is between 2.20% and 2.30%, which is the same as the initially assigned range for CarMax’s previous securitizations this year.
Additionally, last month Volkswagen’s U.S. captive finance arm, VW Credit Inc., reentered the prime ABS space with a $1 billion issuance, thanks to stronger collateral and credit enhancements, according to presale reports from S&P Global Ratings and Fitch Ratings.
Prime auto loan collateral performance was mostly positive in June, despite Kroll Bond Rating Agency’s forecast reporting that auto loan credit performance would start to deteriorate. However, “both prime and nonprime collateral performance is expected to worsen in July, as seasonal factors should push losses and delinquency rates incrementally higher each month through the remainder of the year,” the rating agency noted in its Prime Auto Loan Index.
In June, annualized net losses in KBRA’s Prime Auto Loan Index fell 0.53% year over year, while 60-day delinquency rates increased to 0.44% compared with the year prior. KBRA attributes the year-over-year improvement in index loss to “comps within the CarMax, Chrysler, and CRB Auto ABS shelves,” the report notes.
