S&P Assigns Rtgs to Navistar Financial 2000-A
10 March 2000
S&P Assigns Rtgs to Navistar Financial 2000-A
NEW YORK--Standard & Poor's--March 9, 2000-- Standard & Poor's today assigned its ratings to Navistar Financial 2000-A Owner Trust's US$475.0 million publicly offered asset-backed notes (see list).The ratings are based on the credit support available to the notes, the performance of Navistar Financial Corp.'s (NFC) truck, bus and trailer receivables portfolio, and a sound legal structure.
Credit support available to noteholders is made up of subordination, a reserve account, and excess spread. There is additional credit enhancement in this transaction, versus previous offerings, to offset less excess spread. Subordination of 3.75% is available to all four A classes. Principal payment is sequential to the class A-1 money market tranche as long as class A-1 is outstanding. After the money market pays off, the principal distribution is 96.5% for the triple-'A' rated notes and 3.5% for the single-'A' notes (pro rata). The reserve account is available to all noteholders and builds from an initial deposit of 4.75% to 5.50%, with a floor of 2.0%, subject to portfolio performance triggers that would increase the required reserve amount to 10% if rolling three-month average net losses equal 1.5%, or if 60-plus day delinquencies equal 2%. There is also prefunding of approximately 20%, or US$94.2 million.
The short-term rating of 'A-1'-plus assigned to Navistar Financial 2000-A Owner Trust's class A-1 notes is based on a cash flow stress at a 0.5% absolute prepayment speed/0.0% loss scenario, which ensures that the A-1 money market tranche will be paid off within a 12-month period ending on the March 15, 2001, final distribution date.
The 2000-A retail installment contracts consist of fixed-rate new and used medium and heavy duty trucks, buses and trailers, totaling US$380.8 million in initial receivables. The contracts consist of 83% new vehicles and 17% used. The weighted average contract rate as of the cut-off date is 9.298%. The original term to maturity of the contracts is 56.65 months, and the remaining term is 53.67 months. The average outstanding principal balance of the contracts is US$45,600. The top three state concentrations are New York (8.5%), Texas (7.6%), and Illinois (7.5%). The maximum obligor concentration is 2.0%. Eighty-two percent of the contracts are fleet.
The originator and servicer of the receivables is NFC, the wholly owned finance subsidiary of Navistar International Corp., a leading manufacturer of medium and heavy duty trucks. Chicago-based Navistar is ranked number three in U.S. heavy truck manufacturing, behind Daimler-Benz and PACCAR. Navistar International was recently upgraded to triple-'B'-minus/Stable by Standard & Poor's. At Oct. 30, 1999, NFC's serviced gross retail portfolio was US$2.8 billion, up 14% from the prior year.
Net losses on NFC's serviced portfolio were 0.31% for the fiscal year ending Oct. 31, 1999, down 11 basis points from the previous year. Recoveries remained high (76%) because of a strong used truck market. Repossession rates have improved to 1.94% for fiscal year 1999, versus 2.31% for fiscal year 1998. At Oct. 31, 1999, 60-plus day delinquencies were 0.52%, versus 0.61% a year earlier, Standard & Poor's said. -- CreditWire
RATINGS ASSIGNED Navistar Financial 2000-A Owner Trust Issue Rating Class A-1 US$84.0 million 6.08% notes A-1+ Class A-2 US$142.0 million 6.82% notes AAA Class A-3 US$110.0 million 7.20% notes AAA Class A-4 US$121.2 million 7.34% notes AAA Class B US$17.8 million 7.47% notes A