Fitch Rates Honda Auto Receivables 2001-3 Owner Trust
NEW YORK--Oct. 17, 2001--Fitch rates Honda Auto Receivables 2001-3 Owner Trust (the trust) class A notes as listed below. -0--- $482,000,000 2.38875% class A-1 notes, rated 'F1+'; -- $475,000,000 2.76% class A-2 notes, rated 'AAA'; -- $438,000,000 3.40% class A-3 notes, rated 'AAA'; -- $405,000,000 3.96% class A-4 notes, rated 'AAA'.
The trust also issued $46,164,789.37 in certificates that are initially retained by the seller and will not be rated. Fitch's ratings address the likelihood that the noteholders will receive full and timely payment of interest and ultimate payment of principal by the legal final distribution date of each class. The ratings on the class A notes are based on initial credit enhancement provided by a 2.50% subordinated certificate piece and a 0.50% reserve fund, the transactions' sound legal and cash flow structure, and the high quality of the retail auto receivables originated and serviced by American Honda Finance Corporation (AHFC). This represents a 25 basis point reduction in enhancement from 2001-2. Excess spread created by the difference between the weighted average APR on the receivables and the weighted average coupon (WAC) on the notes increased due to lower pricing on the notes. Additionally, higher concentration of incentive loans (typically given to only the highest credit quality obligors) and the inclusion of Honda certified used loans lowered Fitch's expected net losses for 2001-3.
Principal and interest on the notes is distributed monthly, commencing on Nov. 19, 2001. Principal is distributed on a modified pro rata basis, with the class A-1 notes receiving all principal collections until paid in full. Once the class A-1 notes are retired, principal is distributed sequentially among the remaining class A notes, but pro rata with the certificates. However, in the event that the reserve fund on any distribution date would be less than its specified level, the notes will receive all of the principal collections until such time as the reserve account is funded up to its specified level.
At closing, $1,361,941.97 was deposited into a yield supplement account, which augments interest collections on receivables with annual percentage rates (APRs) less than the time weighted average note rate plus the 1% servicing fee. The amount deposited into the yield supplement account is lower than in the 2001-2 and 2001-1 transactions, and is attributable to the factors discussed earlier (increased excess spread and lower expected net losses).
Business and credit stress scenarios were applied to the collateral to insure that the structure is sufficient to withstand 'AAA' scenarios. Under the available credit enhancement the class A notes can sustain more 5.0 times (x) Fitch's base case cumulative net loss estimate, which is consistent with a 'AAA' rating.
AHFC, the captive finance subsidiary of American Honda Motor Co., Inc. (AHMC -- rated 'F1' by Fitch), originates and services retail auto sales contracts. AHMC is a wholly owned subsidiary of Honda Motor Co., Ltd. (HMC), Japan's third largest car manufacturer. HMC, a leading manufacturer of motorcycles, motor vehicles and power equipment, ranks among the world's top 10 producers of such products.