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S&P Assgns Prelm AAA Rtg to Honda Finance Auto Ln Sec

16 June 2000

S&P Assgns Prelm AAA Rtg to Honda Finance Auto Ln Sec

    TOKYO - Standard & Poor's today assigned its preliminary triple-'A' rating to JHFC Auto Loan Funding Corp.'s JPY32.6 billion secured amortizing floating-rate notes due 2005. The transaction is originated by Honda Finance Co. Ltd.

    The preliminary rating is based on information as of June 16, 2000. Subsequent information may result in the assignment of a final rating that differs from the preliminary rating.

    The transaction will be the first public crossborder securitization for Honda Finance, a wholly owned captive finance company of Honda Motor Co. Ltd. (A/Stable/A-1). This securitization will use a complete pass-through structure in which principal collections will be passed through to noteholders on a monthly basis.

    The JPY32.6 billion notes are expected to be secured by JPY32.6 billion of floating-rate, asset-backed bonds issued by Woodpecker Funding Corp. The bonds, in turn, are expected to be secured by a senior beneficial interest in a trust created with Mitsubishi Trust & Banking Corp. (MTB) from a pool of auto loan receivables. Honda Finance will entrust an aggregate amount of approximately JPY35 billion of auto loan receivables to the trust.

    Standard & Poor's preliminary rating addresses the full and timely payment of monthly interest and the ultimate full repayment of principal by the legal maturity date of the notes. The preliminary rating on the notes is based on:

    --  Overcollateralization of JPY2.4 billion (6.86% of the
        receivables pool);

    --  The strict eligibility criteria for loans in the pool,
        including restrictions that limit eligible loans to only those
        made for the purchase of new, four-wheel vehicles;

    --  A JPY260 million nonamortizing cash reserve to be funded at
        closing;

    --  The strong credit quality of Honda Finance as the master
        servicer, whichreduces servicer commingling risk;

    --  The existence of MTB as a servicer of last resort;

    --  The status of Woodpecker Funding and JHFC Auto Loan Funding as
        special-purpose, bankruptcy-remote entities; and

    --  The existence of a swap agreement with a highly rated
        counterparty to mitigate interest-rate risks.

PRELIMINARY RATINGS ASSIGNED Issue Rating JPY32.6 billion secured amortizing floating-rate notes AAA