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11 Mar 2004
MOODY'S RATES WELLS FARGO FINANCIAL'S 2004-A AUTO LOAN SECURITIZATION
$500 Million of Asset-Backed Securities Rated.
New York, March 11, 2004 -- Moody's has assigned ratings of Prime-1 and Aaa to the Class A
notes of the Wells Fargo Financial Auto Owner Trust 2004-A auto
loan securitization. The ratings of the notes are based on the
quality of the underlying automobile loans and their expected performance;
the strength of the transaction structure; the enhancement provided
by subordination, a reserve account and available excess spread;
and the role of Wells Fargo Financial, Inc. (WFF) as master
servicer and the ability of Wells Fargo Financial Acceptance, Inc.
(WFFA) to perform servicing and collection functions. In addition,
the Prime-1 rating of the Class A-1 notes is based on the
expected cashflows on the underlying receivables during the collection
periods prior to the Class A-1 final maturity date. The
complete rating action is as follows:
COMPLETE RATING ACTION
Issuer: Wells Fargo Financial Auto Owner Trust 2004-A
$144,000,000 1.0725% Class A-1
Notes, rated Prime-1
$113,000,000 1.47% Class A-2 Notes,
$128,000,000 2.06% Class A-3 Notes,
$115,000,000 2.67% Class A-4 Notes,
WFF'S FIRST SENIOR-SUBORDINATED SUBPRIME AUTO LOAN SECURITIZATION;
PRO-RATA PAY STRUCTURE
This is the first subprime auto loan securitization conducted by WFF,
a wholly owned subsidiary of Wells Fargo & Company. WFF,
the master servicer of the receivables, will enter into a subservicing
agreement with WFFA, a wholly owned subsidiary of WFF, which
will service and collect the receivables.
WFFOT 2004-A transaction is a senior-subordinate,
pro-rata pay structure. The receivables are originated by
WFFA and subsidiaries and sold to Wells Fargo Financial Receivables,
LLC. Along with the Class A notes, the trust will issue certificates
with a principal amount of $251,879,699 that are not
being offered. Principal distributions will be allocated sequentially
among Class A notes and pro-rata between the Class A notes and
the certificates. Target enhancement level needs to be achieved
behind the Class A notes before any principal is paid to the certificates.
CLASS A NOTES BENEFIT FROM A RESERVE ACCOUNT, OVERCOLLATERIZATION,
SUBORDINATION AND EXCESS SPREAD
Credit enhancement will be provided by a reserve account, overcollateralization,
subordination and excess spread. The fully funded reserve account
will have a target of 2.0% of the outstanding pool,
subject to a floor of 1.5% of the original pool.
Initially, the Class A notes will be supported by subordinated certificates
of 33.5% of the pool. Excess spread will be used
to build overcollateralization until the sum of overcollateralization
and the certificates equals 37.5% of the outstanding pool.
Thereafter, principal will be allocated pro-rata between
the notes and the certificates.
SECURITIZED RECEIVABLES POOL CHARACTERISTICS
WFFA, a Minnesota company, focuses on the nonprime auto finance
market. WFFA expanded its business with the acquisition of Flagship
Credit Corporation in December 2000. Flagship Credit Corporation
resulted from the merger of Franklin Acceptance Corporation and Procredit,
Inc. WFFA is organized around two operating units: a direct
lending unit and an indirect lending unit.
The receivables pool backing WFFOT 2004-A notes consists of retail
installment sales contracts secured by new and used automobiles and light
trucks. This pool was originated by WFFA's indirect lending unit
which acquires retail installment sales contracts primary from franchised
motor vehicle dealers. The composition of the receivables as of
the statistical cut-off date is as follows: a weighted average
original maturity of 67.9 months, a weighted average remaining
maturity of 58.3 months and a weighted average seasoning of approximately
9.6 months. The percentage of new vehicles is 33%.
The top 3 states represent approximately 33% of principal balance:
Texas (13%), California (12%) and Illinois (8%).
EXPECTED POOL PERFORMANCE: LOSSES AT THE LOW END OF SUBPRIME AUTO
Moody's cumulative net loss expectation for the WFFOT 2004-A transaction
is based on WFFA's indirect loan portfolio vintage performance as well
as on the analysis of Flagship deal performance. Flagship's most
recent deals cumulative net losses are trending around 10 to 11%.
The WFFOT 2004-A pool is based on similar programs present in Flagship's
securitized pools. However, the WFFOT 2004-A pool
also contains a portion of deeper subprime loans and a small portion of
near-prime loans originated under programs introduced by WFFA.
The result of this mix would be a higher expected loss than in Flagship's
deals but at the low end compared with most subprime auto transactions.
The strength of WFF as an entity and its role as master servicer helps
to reduce variability around the expected pool performance. The
seasoning of the pool is another positive that could lead to lower losses
on the securitized pool. Both of these positive factors are being
considered in the assigned ratings.
Wells Fargo Financial Acceptance, Inc. is a direct wholly
owned subsidiary of Wells Fargo Financial, Inc. (rated Aa1),
an indirect wholly owned subsidiary of Wells Fargo & Company (rated
Prime-1/Aa1). Wells Fargo & Company, headquartered
in San Francisco, California, is the fourth largest bank holding
company in the U.S., with assets of $370 billion
at March 31, 2003. Wells Fargo is the product of the 1998
merger of Norwest Corporation (founded in 1929 in Minnesota) and the former
Wells Fargo & Company (founded in 1852 in California).
Additional research is available on www.moodys.com.
Structured Finance Group
Moody's Investors Service
Structured Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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