Porsche Issues First-Ever Securitization

Porsche Financial Services issued its inaugural securitization last week ― a $518.5 million privately placed transaction that was “significantly oversubscribed,” according to sources, and priced tighter than anticipated.

PFS has been originating and servicing auto loans and leases since 1997. In last week’s deal, 70% of the cars and SUVs securing the retail installment contracts were new; 30% were used. The average credit score was 764, and the average outstanding loan balance was $41,119, according to Fitch Ratings.

Pricing on the transaction was similar to American Honda Finance Corp.’s May 18 securitization: 17 basis points on the 0.95-year tranche, 23 basis points on the 1.95-year tranche, and 27 basis points on the 2.82-year tranche.

“Porsche has always wanted to come to the ABS market, and from a strategic standpoint it made sense now” given the steady performance and stabilization of the auto ABS sector, said one market insider close to Lisle, Ill.-based PFS, in this Reuters article. “This is their first deal, but it won’t be their last.”

JPMorgan, Barclays Capital, and Royal Bank of Scotland were the lead underwriters.

The auto ABS market is on track to hit $65 billion this year, up 30% from $50 billion last year, according to Standard & Poor’s.