Behold — the first ABS to be issued since the Dodd-Frank bill caused the market to paralyse, the securitisation markets to declare the end of the world, and the ratings agencies to fight for free speech.
It comes from Ford and it is a $1.082bn bond backed by automotive loans.
And according to the Wall Street Journal, it could not have been done without the help of the Securities and Exchange Commission. The bailed-out car company worked directly with the SEC to come up with that six-month moratorium that will allow issuers to publish deal documents without an official rating.
But that doesn’t mean that Ford’s ABS has actually gone out unrated. (The Class A-1 notes are expected to be rated F-1+ by Fitch, while the other Class A notes are expected to receive triple-As . While the class B, C and D notes are expected to receive AA, A and BBB ratings, respectively).
It just means that all Fitch’s ratings opinions still carry a big fat disclaimer:
The information in this report is provided “as is” without any representation or warranty of any kind. A Fitch rating is an opinion as to the creditworthiness of a security. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors bythe issuer and its agents in connection with the sale of the securities. Ratings may be changed, suspended, or withdrawn atanytime for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicablecurrency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of Great Britain, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.
Related links:
Rating agency eyes point-in time model - Total Securitization
What’s the SEC to do about 436(g)? Call a time out – FT Alphaville
Why repealing Rule 436(g) violates the first amendment and other rating agency guff – FT Alphaville