Ally preps first non-prime auto transaction

Tue Jan 8, 2013 4:22pm EST

NEW YORK, Jan 8 (IFR) - Ally Financial is prepping its first ever non-prime retail auto loan transaction with an offering expected to be announced early next week, subject to market conditions.

Ally, the former auto lending arm of General Motors Co, is expected to unveil a structure consisting of US$790m in sequentially tranched Triple A classes and US$150m in Double A, Single A and Triple B notes.

Bank of America will be structuring lead with Barclays and Citigroup acting as joint leads.

Moody's and Standard & Poor's are expected to assign the ratings. The subordinated tranches may be retained initially by the depositor or its affiliate, deal documents show.

The primary assets will consist of a pool of fixed-rate retail installment sale contracts and direct purchase money loans used to finance the purchase of new and used cars and light trucks.

All of these contracts and loans are obligations of non-prime credit quality obligors.

Receivables with non-prime obligors have higher default rates than those with prime credit and some may not qualify for conventional motor vehicle financing due to a lack of or adverse credit history, low income levels or the inability to provide an adequate down payment.

The FICO score is approximately 630, which is roughly 39 points higher than the subprime-retail backed Santander offering, which is expected to price this week. Given the deal's novelty, there are no direct pricing comparables.

Similar to Ally Bank deals (Ally Prime Auto and Ally Auto Lease), AFIN deals will be serviced by Ally Financial Inc.

Ally has returned its focus to auto lending and Internet banking after spending the last several years working to repay billions of dollars of debt raised in a series of financial-crisis-era programs.

In December, the company, which is still 74 percent owned by the US government, repaid the final USD4.5 billion of debt extended to it by the government's Temporary Liquidity Guarantee Program.

Ally was bailed out after suffering heavy losses at its Residential Capital mortgage unit during the 2008 financial crisis.

Last year, ResCap filed for bankruptcy and Ally reached agreements to sell international operations in an effort to speed up repayment to taxpayers.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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