Auto loan-backed bond deal secures upgrade from rating agency Moody’s

Moody’s rating agency has revalued bonds issued by Irish car credit company First Citizen Finance.

It’s a boost to a segment that at one point was seen as very vulnerable to a Covid downturn.

The ratings raised and confirmed by Moody’s in Citizen Irish Auto Receivables Trust 2018 Designated Activity Company, a securitization backed by 158 million euros of Irish auto loans, claiming that the book had performed better than expected and had benefited from a credit enhancement , including building up a cash buffer.

This should be a boost for issuers in general, given the relatively immature nature of the Irish auto loan-backed finance market.
structures entering the Covid.

“The performance of the transaction has remained stable since the last rating action in January 2021.

“Arrears of 60 days and over increased slightly to 1.32 pc from their previous peak of 1.05 pc reached in June 2020.

“Cumulative defaults currently amount to 0.92 pc of the initial pool balance, with a pool factor of around 25 pc, taking into account the
replenishments during the renewal period, ”Moody’s said.

Accounts filed in 2020 by First Citizen indicated that up to 10% of borrowers took advantage of the short-term forbearance offered by the lender in the first six months of the Covid crisis, but it was quickly reduced as the economic situation stabilized.

First Citizen Finance has a total loan portfolio of more than € 500 million divided between automobile loans, SME financing and agricultural equipment and commercial real estate loans.

The First Citizen business was formed when the asset finance arm of Permanent TSB was sold in a € 287 million management buyout agreement led by Chris Hanlon and backed by Deutsche Bank in 2012.

Mr. Hanlon then secured backing from US hedge fund Magnetar Capital, which now owns a 66% stake, with the other third being owned by Hanlon himself and other managers.

About Galen A. Williams

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