Ford Credit Auto Owner Trust 97B $1.6B Notes 'AAA/F-1+' By Fitch - Fitch Financial Wire -
31 October 1997
Ford Credit Auto Owner Trust 97B $1.6B Notes 'AAA/F-1+' By Fitch - Fitch Financial Wire -
NEW YORK, Oct. 31 -- Ford Credit Auto Owner Trust 1997-B's
$490 million class A-1 5.748% asset-backed notes are rated 'F-1+' by Fitch.
In addition, the $388 million class A-2 5.95% asset-backed notes, the
$514 million class A-3 6.05% and the $189 million class A-4 6.15% are all
rated 'AAA'. Furthermore, the $93.5 million class B 6.40% asset-backed notes
are rated 'A+' and the $25.5 6.65% asset-backed certificates 'BBB+'.
The ratings on classes A and B are based upon their respective levels of
subordination, and the specified credit enhancement amount, which consists of
funds in the reserve account and overcollateralization. The rating on the
certificates is based on the credit support provided by the specified credit
enhancement amount. All ratings reflect the transaction's sound legal
structure and the high quality of the retail auto receivables originated and
serviced by Ford Credit.
Approximately 70% of the principal balance of the receivables represent
financing for new vehicles. The pool is well diversified geographically with
only one state, Texas (11.40%), constituting more than 10% of the pool. As of
the cutoff date, the receivables had a weighted average remaining maturity of
approximately 47 months and slightly over 8 months of seasoning.
Principal and interest on the notes and certificates will be distributed
monthly. Classes A-1 through A-4 are sequential pay note classes. In
addition, no principal will be distributed to the class B notes until the
class A-4 notes are paid in full, and no principal will be paid to the
certificate holders until the class B notes have been paid in full.
Initial credit enhancement for the class A notes is 9.00% and consists of
7.00% subordination from the class B notes (5.50% ) and the certificates
(1.50%), as well as the 2.00% initial deposit to the reserve account. After
the closing date, the specified credit enhancement amount will be 5.00% (2.00%
reserve account and 3.00% overcollateralization), thereby bringing total
target class A credit enhancement to 12%. Additional credit enhancement for
the class A notes is provided by the transaction's sequential pay structure.
Since the class B notes and certificates will not receive any principal until
the class A notes are paid in full, available subordination for the class A
notes will increase as the pool amortizes.
Initial credit enhancement for the class B notes is 3.50% and consists of
1.50% subordination of the certificates and 2.00% in the reserve account.
Target enhancement is 6.50% and will be made up of the subordination of the
certificates and the specified credit enhancement, as described above.
Similar to the class A notes, available subordination for class B will
increase as the pool amortizes as the certificates will not receive any
principal until the class B notes are paid in full. Credit protection for the
certificates consists solely of the specified credit enhancement amount.
Thus, initial credit enhancement for the certificates will be 2.00%, and will
increase to 5.00% as overcollateralization builds to its target level.
In addition, to the credit enhancement described above, the 1997-B
transaction provides significant structural protection through a shifting
payment priority mechanism. In each distribution period, a test will be
performed to calculate the amount of desired overcollateralization for the
notes versus the actual overcollateralization. If the desired level of
overcollateralization is less than the actual, then payments of interest to
subordinate classes will be suspended and made available as principal to
higher rated classes.
Based on the loss statistics of Ford Credit's prior securitizations, as
well as Ford's U.S. retail portfolio performance, Fitch expects excellent
performance from the pool of receivables in the 1997-B pool. For the six
months ended June 30, 1997, Ford's retail portfolio of approximately
$40 billion 60+day delinquencies were 0.41% as a percentage of average
contracts outstanding and annualized net losses as a percentage of the average
outstanding principal balance were 1.55%.
SOURCE Fitch Investors Service