Ford Auto Securitization Trust II expected ratings highlight Canadian ABS credit trends

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Ford Auto Securitization Trust ABS ratings

Highlights

Fitch expects Ford Auto Securitization Trust II, Series 2026-B to receive AAA(EXP)sf ratings on A1, A2, A3 notes and AA+(EXP)sf on B notes, reflecting adequate initial enhancements of 5.25% for class A and 2.26% for class B.
The $2026-B collateral pool comprises 95.5% new vehicles with a weighted average FICO of 777, a loan-to-value ratio of 113.4%, and 34.0% of loans at 84-month terms—higher than 2026-A.
While FCCC portfolio losses and delinquencies in recent vintages have increased toward the high end of historical ranges, 2025 vintages show some improvement, and lower excess spread in 2026-B reduces structural protection.

Expected note ratings and transaction structure

As reported by Fitch Ratings, Ford Auto Securitization Trust II, Series 2026-B is expected to receive AAA(EXP)sf ratings on the A1, A2 and A3 notes, an AA+(EXP)sf rating on the B notes, and an NR(EXP)sf rating on the C notes.

Fitch says its analysis uses a 1.00% rating case cumulative net loss proxy derived from Ford Credit Canada Company's recessionary static managed portfolio performance and more recent managed vintages. The agency says initial hard credit enhancement totals 5.25% for the class A notes and 2.26% for the B notes, levels it views as sufficient for the expected loss coverage at each class.

The 2026-B collateral pool remains close to recent series and is composed mainly of prime obligors, with a weighted average FICO score of 777. New vehicles make up 95.5% of the pool, the loan-to-value ratio stands at 113.4%, and 84-month loans account for 34.0%, a higher share than in 2026-A.

Portfolio performance and Canadian market implications

Fitch says losses in FCCC's portfolio remain low and, while they have risen from pandemic-era lows, they are still below pre-pandemic levels. The agency notes some deterioration in recent securitizations, especially 2024 vintages, with delinquencies and projected losses moving toward the upper end of historical ranges, though 2025 vintages show some improvement.

For the 2026-B pool, weighted average seasoning is 5.6 months, below the 7.0 months seen in 2026-A, while model concentration improves modestly and the top five models account for 68.5% of the collateral. Electric and hybrid vehicles represent 13.8% of the pool, including 10.7% hybrids and 3.1% battery electric vehicles.

Fitch also points to lower excess spread of about 1.75%, down from 2.30% in 2026-A and 2.16% in 2025-B, as a factor that narrows protection relative to some recent series. Still, the agency says FCCC's underwriting, origination and servicing record remains adequate, supported by Ford Motor Credit Company LLC's performance guarantee and the BBB- long-term issuer ratings with Stable Outlooks on both Ford Motor Company and FCCC.

Our earlier coverage of Hainan Rubber’s proposed subordinated perpetual sustainable securities outlined Fitch’s BBB- rating rationale, focusing on the instruments’ subordinated position in the capital structure and the issuer’s ability to defer coupons. We also highlighted Fitch’s view of group support, the company’s elevated leverage, and its liquidity profile as it seeks to refinance offshore debt through its Halcyon Agri unit.

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