The £420m E-Carat 8 was priced on March 30, one day after Prime Minister Theresa May triggered Article 50, notifying the European Union of the UK’s intention to leave the bloc.
The deal also came after after the news that GMAC’s parent, GM Financial, was selling its OPEL division to French giant PSA Group. Opel operates under the Vauxhall brand in the UK. Approximately 93% of the pool is backed by loans on Vauxhall vehicles.
However, neither piece of news appeared to have an impact on investors' demand for the bonds.
“We all recognise now that article 50 hasn't really had an impact on the market, particularly on short dated secured assets," said a banker on the deal. "It was also sold against the backdrop of the PSA news and yet we priced the triple-As inside 40bp, at 38bp over Libor.”
The transaction was arranged by Bank of America Merrill Lynch, with Lloyds Bank and RBC as joint leads.
Buyers bought the class 'B' notes at 85bp over Libor and the banker said that there were a number of investors who traditionally would have only been interested in senior notes seen moving down the capital stack.
Speaking about the investor book, the banker said it was a broader base of buyers than had been seen historically.
“The breadth of the investor base looking at transactions is the strongest I've seen it in a couple of years,” he said adding that asset managers, money managers and even some bank treasuries were looking to buy.
For the senior notes, asset managers and bank treasuries made up 56% and 35% of buyers, respectively, with 92% of investors from within the UK. The class 'B' buyer pool was 65% asset managers and 35% bank treasuries.
The level of demand also points to investors' growing comfort and familiarity with with personal contract purchase receivables, which make up 56.1% of the preliminary portfolio, up from GMAC’s last deal. Borrowers under PCP contracts may return their vehicle in lieu of the final balloon payment.
According to S&P Global Rating, this means that the transaction is exposed to residual value risk if a returned vehicle's sale value is lower than the residual value implied by the balloon amount.