Harley-Davidson Trust prepares to issue $631.5 million in bonds

The second securitization of retail motorcycle contracts will raise $631.5 million in asset-backed securities through the Harley Davidson Motorcycle Trust, 2024-B, with the high-quality bond pool expected to mature between October 2025 and April 2032.

The existing pool of borrowers with FICO scores below 700 represents 14.9% of the pool, compared with 13.5% of the 2023-B transaction, according to the Fitch Ratings analysis. The bonds benefit from initial hard credit enhancements totaling 5.0% of the initial pool balance, including a 0.25% reserve fund, Moody’s Ratings analysts said.

The deal will issue bonds through four class A notes, all pegged to a short-term interpolated yield curve, according to the Asset Securitization Report’s deal database. The A1 notes are priced on a three-month benchmark, while the rest of the bonds are priced on a one-month basis. Expected yields start at 4.9% for the A1 notes, which have P1 and F1+ ratings from Moody’s and Fitch, respectively.

Moody’s and Fitch assigned Aaa and AAA ratings to ratings A2 through A4, respectively. Citi Group Global Markets, Mizuho Securities and Mitsubishi UFG Securities were the lead underwriters on the deal, the ratings agencies said. The database also said they were the managers of the deal.

Analysts said Moody’s expects a cumulative net loss of 2.0% for the transaction, called HDMOT 2024-B. Cumulative net loss remains unchanged from 2024-A, while the loss at the Aaa level widened by 75 basis points.

The notes benefit from reserve funding, overcollateralization and overspread. The pooling improves as the notes are amortized, Moody’s said, indicating another positive credit feature. The notes have a weighted average (WA) FICO score of 758, an APR of 9.35% and an original maturity of 70 months, the rating agency said.

The majority of the loans in the pool, 74%, finance new acquisitions, with remaining maturities of 61 months. Geographically, the pool appears diversified, with Texas, California, and Florida accounting for 11.7%, 9.5%, and 8.3%, respectively.