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S&P Rates Honda Auto Receivables 97-B Grantor Trust AAA

3 November 1997

S&P Rates Honda Auto Receivables 97-B Grantor Trust AAA

    NEW YORK, Nov. 3 -- Standard & Poor's today assigned its
triple-'A' rating to Honda Auto Receivables 1997-B Grantor Trust's class A
asset-backed certificates.
    The rating is based on credit support provided by 6.00% 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 is also based on a sound
legal structure and strong pool characteristics that include collateral
comprised solely of new autos as well receivables with approximately 11 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. Unlike the reserve account for the
1997-A transaction, which builds from 0.15% to 0.75% of initial collateral
balance, the reserve account for 1997-B is fully funded to the 0.75% cap at
closing. Excess spread of approximately 1.50% annually is also available as
first loss protection.
    American Honda Finance Corp.'s (AHFC) overall portfolio performance has
somewhat deteriorated 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 AHFC's fiscal 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, the portfolio performance of loans backed by new car collateral,
which comprises 100% of the 1997-B pool, has improved, on a growth adjusted
basis, from 0.63% in net losses as of Aug. 31, 1996 to 0.38% in net losses as
of Aug. 31, 1997. 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 approximately 1.7  times (x)
higher, on average, than net losses of new auto loans.
    Series 1997-B is AHFC's fifth public securitization of automobile
receivables. AHFC is a wholly owned finance subsidiary of American Honda Motor
Co. Inc., the sole authorized distributor of Honda and Acura vehicles, power
equipment, parts, and accessories in the U.S. American Honda Motor Co. Inc. is
a wholly owned subsidiary of Honda Motor Co. Ltd., a Japanese corporation and
a worldwide manufacturer and distributor of motor vehicles and power
equipment. AHFC's headquarters are located in Torrance, Calif., Standard &
Poor's said. -- CreditWire

SOURCE  Standard & Poor's CreditWire