GM Financial Issues $1.25B Securitization to Jumpstart 2019

GM Financial has kicked off 2019 auto asset-backed securitization activity with a $1.25 billion deal issued last week, according to presale reports.

Although analysts anticipate macroeconomic headwinds, such as interest rate stresses, to hit the industry this year, Fitch Ratings Agency said in its presale report that losses in GM Financial’s 2016 and 2017 managed portfolio and securitizations “are low and have been improving.”

GM Financial began originating prime loans in 2014, so empirical data on the performance of these loans is thin, Fitch said. In its rating, Fitch used data from comparable origination platforms to supplement GMF data. As a result, it derived a forward-looking credit loss expectation of 1.25%, down from 1.40% to 1.50% from its 2018 ABS transactions. The deal is the eighth by the captive finance arm of General Motors since 2010.

The transaction is backed by 45,890 loans, down from 46,634 loans in GMF’s first ABS deal of 2018. The average principal balance was essentially flat at $28,731, according to Fitch.

Loans in the transaction have weighted average Fico scores of 778, compared with scores in the 760 to 770 range in the past two years, and new vehicles account for 87.7% of the pool.

GM Financial issued approximately $5.4 billion in four separate securitizations last year, the most recent in October 2018 at $1.3 billion.