Hyundai Auto Receivables Trust is issuing $1.3 billion of notes, collateralized by a pool consisting virtually entirely of new Hyundai and Kia vehicles.
Cars account for 30.3% of the vehicles in the pool, while the rest are trucks, SUVs, crossover sports utility vehicles and minivans. Electric or hybrid vehicles account for 12.5% of the pool, according to Fitch Ratings.
As part of the HART 2023-B deal, six classes of fixed-interest notes are being issued. At closing on July 31, the class A-2 notes may be split into a fixed-rate class A-2-A and a floating-rate class A-2-B. The classes could be upsized to a total of $1.65 billion, according to S&P Global Ratings. The lead underwriter is Barclays Capital.
HART 2023-B’s pool size, number of loans, and seasoning are down from HART 2023-A, issued in March 2023. However, the percentage of new vehicles, the average principal balance, the weighted-average annual percentage rate and the weighted-average loan-to-value ratio are all up in comparison with 2023-A.
The weighted average APR is 4.96%, compared with 3.72% in HART 2023-A. The weighted-average LTV is 102.4%, versus 101.9% in the earlier securitization.
The loans are sponsored, sold and serviced by Hyundai Capital America, which Fitch regards as a capable originator, underwriter and servicer for this series. Positives include a FICO score of 767, a pool consisting of 96.4% new vehicles and strong model and segment diversification. The pool has a 64.7% concentration of loans with extended term contracts of at least 61 months, compared with 65.1% in the HART 2023-A pool.
The concentration of FICO scores above 750 is the highest for recent HART transactions between 2017 and 2022, at 64.4% of the 2023-B pool. Seasoning is lower, with 2023-B at 9.2 months versus 15.9 months in 2023-A, but consistent with prior transactions, Fitch says.
Initial hard credit enhancement totals 7.55%, 5.75% and 2.75% for the class A, B and C notes, respectively, according to Fitch. The rating agency’s 2023 asset performance outlook for the prime auto loan ABS sector has been revised to “deteriorating” relative to 2022.
S&P has provisionally assigned A-1+ to class A-1, AAA to classes A-2-A/A-2-B, A-3 and A-4, AA+ to class B, and AA to C. Fitch has provisionally assigned F1+ to class A-1, AAA to classes A-2-A/A-2-B, A-3 and A-4, AA+ to class B, and A+ to class C.
