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Credit enhancement to mitigate ABS losses during recession

MIAMI — Recently issued subprime auto bonds rated below triple-A are at risk for downgrades in a hypothetical recession, according to a study conducted by rating agency DBRS. However, the risk is mitigated by built-in credit enhancement in auto securitizations’ structures, DBRS analysts told Auto Finance News. DBRS’s study involved a simulation “similar in scope […]

Securitization residual values hit 12-year low

The average residual value expected in auto lease securitizations this year dropped to a level unseen since 2007, according to a report published last week by Moody’s Investors Service. Residual value risk, as measured by securitizations’ residual value settings, was set at an average of 46.2% of MSRP, down from 47.1% in 2018. “The lower […]

Fair eyes new debt funding

Fair is in discussion with a "major global financial institution" for as much as $500 million of debt funding, Co-Founder Georg Bauer told Auto Finance News. To date, the 3-year-old vehicle subscription company has raised $1.5 billion in funding over nine rounds. "Once this [funding] is closed, we are picking up our work with the […]

GM Financial, Hyundai ramp up lease ABS with $1.9B of issuance

General Motors Financial and Hyundai Capital America are driving auto lease ABS volume, bringing a combined $1.9 billion of receivables to market, according to presale reports from S&P Global Ratings.  GMF’s $1 billion deal marks the captive’s third lease securitization this year, boosting its total volume to $3.4 billion in 2019. The collateral pool consists […]

China’s auto ABS market tops $4.5B on heels of Geely deal

China’s asset-backed securities market is a growing funding source for auto lenders, as issuance has topped $4.5 billion (RMB31.2 billion) this year, according to data from S&P Global Ratings’ China Securitization Performance Watch report.  “We expect improving debt serviceability, enhanced underwriting and risk control, and securitization’s structural protection to continue to support the robust performance […]

Longer-term loans weigh down USAA securitization

Nearly two-thirds of the loans in USAA’s first asset-backed securitization of the year have terms longer than 60 months — a first for the company, according to a Moody’s Investors Service pre-sale report published Tuesday. In the $503 million transaction, 64% of loans have an original term greater than 60 months, which is the highest proportion of […]

Auto ABS heats up with $4.7B of issuance

A handful of prime and subprime securitizers pumped up ABS volume this week, bringing $4.7 billion of loans and leases to market, according to presale reports from S&P Global Ratings.  Auto ABS volume totaled $61.3 billion as of July 8, up 12.7% year over year, according to data from JPMorgan Securities. On the prime side, […]
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