Fitch Expects To Rate Household Automotive Tr VI, Ser 2000-3
1 September 2000
Fitch Expects To Rate Household Automotive Tr VI, Ser 2000-3
NEW YORK--Aug. 31, 2000--Fitch expects to assign the following ratings to Household Automotive Trust VI, series 2000-3:| -- | $136.0 million 6.792% class A-1 notes, `F1+', |
| -- | $158.0 million 6.96% class A-2 notes, `AAA', |
| -- | $175.0 million 7.05% class A-3 notes, `AAA', |
| -- | $193.0 million 7.16% class A-4 notes, `AAA'. |
This will be Household Auto Receivables Corporation's fifth public automobile-backed securitization. The expected ratings are based on the quality of the underlying collateral; the sound legal and cash flow structure; available credit enhancement; and the capabilities of Household Finance Corp. (currently rated `A+/F1') as servicer and Household Automotive Finance Corp. as sub-servicer. Credit enhancement available for series 2000-3, which is identical to that of series 2000-1 and 2000-2, consists of overcollateralization, with a targeted level of 35%; a reserve account, funded initially at 1% of the pool principal balance, with a target level of 3% of current pool balance and a floor of 2% of original pool balance; and excess spread. The expected ratings address the likelihood of payment in full of timely interest and ultimate principal by the final scheduled distribution date of each class.
Fitch applied several business and credit stress scenarios to the collateral pool, which included stressing losses, recoveries, delinquencies and prepayments. The transaction's capital structure can support losses consistent with the `F1+' short-term rating assigned to the class A-1 notes and the `AAA' long-term rating assigned to each of classes A-2, A-3, and A-4.
Interest and principal on the notes is distributed on the seventeenth of each month, or next business day, beginning on Oct. 17, 2000. Principal payments on the notes will be made sequentially, unless an event of default occurs, in which case principal will be paid pro rata.
The collateral securing the notes consists of a pool of non-prime retail installment sale contracts secured by automobiles, light duty trucks and vans. The contracts were originated by Household Automotive Finance Corp. indirectly through a network of dealerships nationwide. Obligors under the loans are considered non-prime due to poor credit history or lack of credit history.
As of the statistical cut-off date (end of business day Aug. 13, 2000), the collateral pool consists of over 54,000 receivables or approximately $883 million in aggregate, with an average principal balance of approximately $16,150. The weighted-average annual percentage rate (APR) on the collateral is 18.43%, and the weighted-average remaining term is 63 months. Seasoning on the pool is approximately 2 months. Approximately 31% of the principal balance of receivables are new cars, with the remaining 69% financing used cars. The pool is well diversified geographically, with California, Texas, and Florida accounting for 14.38%, 13.66%, and 9.74% of the pool, respectively. No other state accounts for more than 6% of the pool.