Fitch Rates Honda Auto Receivables 2005-1 Owner Trust 'F1+/AAA'

NEW YORK--Jan. 19, 2005--Fitch Ratings assigns ratings to the receivables-backed class A notes issued today by Honda Auto Receivables 2005-1 Owner Trust as listed below:

-- $288,000,000 2.686% class A-1 asset-backed notes, 'F1+';

-- $307,000,000 3.21% class A-2 asset-backed notes, 'AAA';

-- $415,000,000 3.53% class A-3 asset-backed notes, 'AAA';

-- $298,900,000 3.82% class A-4 asset-backed notes, 'AAA'.

The trust also issued $43,990,312.71 in certificates that are retained by the seller and not rated. Fitch's ratings address the likelihood that the noteholders receive full payments of interest and principal in accordance with the terms of the transaction documents. The ratings on the class A notes are based on the high quality of the receivables originated and serviced by American Honda Finance Corporation (AHFC), the transaction's sound legal and cash flow structure, the yield supplement account (YSA), and the 3.75% initial credit enhancement provided by the subordinated certificates (3.25%) and a 0.50% nondeclining reserve account growing to a target level of 0.75% of the initial pool balance.

Principal and interest on the notes is distributed monthly, commencing on Feb. 2, 20052, 2005. 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. The certificate interest and principal payments are subordinated to the note interest and principal payments, as well as payments to the reserve account.

The receivables include 83,437 automobile loans, with a total principal balance of $1.35 billion. The credit tier distribution for 2005-1 differs from 2004-3's. In 2005-1, as captured by Honda's proprietary credit scores, there is a positive shift in credit tier distribution. Comparable to that of 2004-3, the 2005-1 transaction has a large concentration in the higher credit tiers, as opposed to one of the lowest percentages in the lower credit tiers. These lower credit tiers typically charge off at a higher frequency than the top tiers.

The 2005-1 transaction contains 86.46% new vehicles, a large concentration that is expected to result in losses similar to those of previous pools. As in prior transactions, 2005-1 includes certified used cars that must meet American Honda Motor Co., Inc.'s program guidelines. These vehicles generally have limited mileage and are better conditioned than standard used cars. The credit scoring system employed by Honda considers certified used vehicles to be comparable to new vehicles. The 2005-1 transaction contains 2% of noncertified used vehicles, a substantial decrease from 2004-3's 4.57%.

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 than 5.0 times (x) Fitch's base case cumulative net loss estimate, which is consistent with an 'AAA' rating. Under the existing structure, 2004-2 is able to sustain more than 5% net losses without incurring shortfall of principal or interest on the class A notes.

Honda Motor Company, Ltd (HMC), AHFC's parent company, is Japan's third largest car manufacturer, a leading maker of motorcycles, motor vehicles, and power equipment, and ranks among the world's top 10 manufacturers. Additionally, HMC enjoys an extremely competitive global position based on its capital and manufacturing efficiency and reputation for producing high quality products. As of Sept. 30, 2004, HMC's consolidated net income totaled $1.15 million, down 7.5% from the prior-year level.