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S&P Rates Honda Auto Receivables 1997-A Grantor Trust Certs AAA

5 August 1997

S&P Rates Honda Auto Receivables 1997-A Grantor Trust Certs AAA

    NEW YORK, Aug. 5 -- Standard & Poor's today has assigned its
triple-'A' rating to Honda Auto Receivables 1997-A Grantor Trust's $1 billion
asset-backed certificates class A.
    The rating is based on credit support provided by 6.25% subordination and
a 0.75% cash reserve account available to the class A rated certificates, as
well as the class B seller-retained piece.  The rating also is based on a
sound legal structure and strong pool characteristics that include collateral
solely consisting of new autos, as well as receivables with 12 months of
seasoning.
    Subordination provides overcollateralization for the senior class.  The
available amount of overcollateralization amortizes with the pool balance as a
result of the pro rata allocation of principal collections between class A and
class B.  The reserve account provides liquidity, as well as a non-amortizing
component of the total credit support.  It builds up from 0.15% of the
original pool balance at closing to a constant 0.75% of the original pool
balance.  Excess spread of approximately 2.0% annually is also available as
first loss protection.
    American Honda Finance Corp.'s (AHFC) portfolio performance has
deteriorated somewhat within the last two years as a result of competitive
pressures to boost the parent company's sales.  Total delinquencies, repos in
inventory, and annualized net losses were 1.65%, 0.46%, and 0.61%,
respectively, for the year ended March 31, 1997, compared to 1.08%, 0.23%, and
0.51% for the prior year ended March 31, 1996, and 1.02%, 0.31%, and 0.47% for
the prior year ended March 31, 1995.
    However, credit support for the 1997-A transaction was maintained at the
same level as the 1995-A transaction due to the strong pool selection criteria
that includes 100% new autos in the 1997-A pool versus 88% in the 1995-A pool.
Historically, AHFC's new auto loans have performed significantly better than
used auto loans.  Based on AHFC's static pool data, used auto loans have net
loss rates that are 1.7 times (x) higher, on average, than net losses of new
auto loans.
    Series 1997-A is AHFC's fourth public securitization of automobile
receivables.  AHFC is a wholly owned finance subsidiary of American Honda
Motor Co. Inc. (AHMC), the sole authorized distributor of Honda and Acura
vehicles, power equipment, parts, and accessories in the U.S. AHMC is a wholly
owned subsidiary of Honda Motor Co., Ltd. (HMC), a Japanese corporation and
worldwide manufacturer and distributor of motor vehicles and power equipment.
AHFC's headquarters are located in Torrance, Calif. -- CreditWire

SOURCE  Standard & Poor's CreditWire