Harley-Davidson was highly profitable, had one of the world’s most valuable brands, and by the end o

Feb 3rd, 2012
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Harley-Davidson was highly profitable, had one of the world’s most valuable brands, and by the end of 2008 had repurchased $4.7 billion of its common stock. Harley-Davidson Financial Services made low-risk loans to Harley retail customers and then sold those receivables to Harley-Davidson Motorcycle Trust. The Motorcycle Trust sold notes backed by the motorcycle receivables to institutional investors. Harley-Davidson’s highly loyal customers rarely defaulted, so the Motorcycle Trust sold notes equal to about 93-96% of the face value of the receivables collateralizing the notes. The subprime securitization market collapsed in late 2007 and entire securitization market effectively closed in the second quarter of 2008. From then through June 30, 2009, the Motorcycle Trust was unable to sell notes backed by Harley-Davidson receivables. As a result, “Finance receivables held for sale” increased from $781 million on December 31, 2008, to $2.444 billion on December 31, 2009. To finance th

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Harley-Davidson was highly profitable, had one of the world's most valuable brands, and by the end of 2008 had repurchased $4.7 billion of its common stock. Harley-Davidson Financial Services made low-risk loans to Harley retail customers and then sold those receivables to Harley-Davidson Motorcycle Trust. The Motorcycle Trust sold notes backed by the motorcycle receivables to institutional investors. Harley-Davidson's highly loyal customers rarely defaulted, so the Motorcycle Trust sold notes equal to about 93-96% of the face value of the receivables collateralizing the notes.The subprime securitization market collapsed in late 2007 and entire securitization market effectively closed in the second quarter of 2008. From then through June 30, 2009, the Motorcycle Trust was unable to sell notes backed by Harley-Davidson receivables. As a result, "Finance receivables held for sale

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