S&P Asgns Harley Davidson Motorcycle Tr 2001-2 Rtgs

    NEW YORK--Standard & Poor's--Oct. 2, 2001--Standard & Poor's assigned its ratings to Harley-Davidson Motorcycle Trust 2001-2's $400 million Harley-Davidson motorcycle contract notes series 2001-2 (see list).
    Standard & Poor's ratings on the senior notes are based on a 5% subordination of the class B notes. All classes benefit from the spread account, equaling 1% of the initial pool balance (building to 2% of the outstanding balance with a floor of 1% of the initial outstanding balance), and excess spread. The class A-1 and A-2 notes will rank equally in priority of interest payments from available funds. This transaction utilizes a pro rata principal pay structure.
    Harley-Davidson Credit Corp. (formerly Eaglemark Inc.) is a wholly owned subsidiary of Harley-Davidson Financial Services (formerly Eaglemark Financial Services Inc.). Harley-Davidson Credit Corp. (HDCC) acts as the seller/servicer in the transaction and has been providing both wholesale and retail financing to dealers and customers of Harley-Davidson motorcycles since 1993.
    HDCC's portfolio of motorcycle sales contracts has grown rapidly over the past few years, as the company continues to boost its presence within the market for Harley-Davidson financing. The portfolio increased approximately 40% to $1.5 billion as of June 30, 2001, from $1.1 billion during the same period in 2000. Part of the growth has been fueled by an expansion of lending activity into a wider credit spectrum. Beginning in 1996, HDCC (then known as Eaglemark) initiated the nonprime Delta loan program, intended to serve customers with below average credit profiles. In general, Delta loan obligors face more stringent underwriting standards than those of HDCC's standard program, such as increased down payment and higher threshold of employment and residence stability requirements.
    As of the initial cutoff date, the securitized collateral consists of motorcycle sales contracts secured by 72% new and 28% used motorcycles. The receivables have a weighted average APR of 12.68% and an average outstanding principal balance of $12,726. The weighted average original term is 74.8 months, with a weighted average remaining term of 72.6 months, consistent with previous transactions. However, the amount of 73-to-84 month contracts, at 42.9% of the initial pool balance, is higher than in the last few transactions that were in the 20% to 30% range. The contracts represent a geographically diverse obligor base with California, the only state exceeding a 10% pool balance concentration. About 75% of the total issue amount will be funded at closing, with all subsequent transfers of contracts into the trust to occur by the November 2001 distribution date. As in previous transactions, the proportion of the relatively poorer performing Delta loans will be capped through the transaction documents.
    Portfolio delinquencies, excluding repossesion inventory as of June 30, 2001, showed some deterioration over the same period a year ago, increasing to 3.86% from 3.11%. Annualized net losses for the portfolio have also increased slightly to 0.88% as of June 30, 2001, up from 0.79% one year earlier.


OUTSTANDING RATINGS ASSIGNED

Harley-Davidson Motorcycle Trust 2001-2
Harley-Davidson motorcycle contract notes series 2001-2

Class    Rating       Balance (mil. $)    Notes
A-1      AAA          $242                3.77%
A-2      AAA          $138                4.72%
B        A            $20                 4.51%