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These distortions include the massive government stimulus provided through the CARES Act, widespread lender forbearance/deferral programs, a curtailment of consumer discretionary purchases that has resulted in significantly higher savings rates, and a post-pandemic surge in used vehicle demand as consumers avoided mass transit and air travel. While retail auto credit performance has been better than Fitch initially anticipated at the outset of the pandemic, auto credit losses are expected to weaken in 2021, as some of the distortions that have been supportive of strong consumer credit performance over the past six months moderate. Credit constraints include weaker balance sheet liquidity and coverage of short-term debt maturities.ĪHFC's strong asset quality continues to compare favorably to peers, and is a testament to the company's conservative underwriting standards. In addition to institutional support considerations, AHFC's credit profile is further supported by its solid credit performance, strong operating margins, relatively low leverage as compared to auto captive finance peers and a predominately unsecured funding profile. and Canada sales financed by AHFC, strong operational and financial linkages between the two companies, shared branding, and a support (keepwell) agreement provided directly by HMC to AHFC. This is supported by the high percentage of HMC's U.S. AHFC's Short-Term IDR is equalized with HMC's Short-Term IDR, as Fitch considers AHFC to be a core subsidiary of HMC. HMC's Rating Outlook was also revised to Stable from Negative. The affirmation of AHFC's ratings is driven by the affirmation of Honda Motor Company's (HMC) ratings.
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Fitch Ratings - New York - : Fitch Ratings affirmed American Honda Finance Corporation's (AHFC) Short-Term Issuer Default Rating (IDR) and Commercial Paper (CP) rating at 'F1'.