Esoteric

An independent valuation said that the total catalog is worth about $2.36 billion, based on projected cash flow from the assets. More than 70% of the songs were released more than 10 years ago.

The $120 million deal is larger than the inaugural transaction from 2023, and includes expandable notes, plus a 36-month revolving period.

Further, the assets have a loan-to-value ratio of about 52%, with a cashflow that can withstand large haircuts.

Sales of airplane leases bundled into bonds have climbed to more than $5 billion this year, from around $1 billion in 2022 and 2023.

All the notes, which are fixed rate, have an Aug. 18, 2031 final maturity date, DBRS said. The transaction will repay investors sequentially.

Credit enhancement on the notes includes 3.5% in excess spread, subordination of the class M notes equaling 3.%, and a liquidity reserve that will equal 0.45% of the closing PACE assets balance.

Marine and recreational vehicles account for 64.7% of the pool, with home improvement accounting for the rest. The A, B, C and D notes benefit from total initial hard credit enhancement levels of 37.7%, 27.2%, 17.5% and 7.5%, respectively.

This is the inaugural deal from Cherry Technology, formerly known as Mason Finance. Its capital structure includes a 24-month revolving period and a strong contingent of credit enhancements.

For one, the deal is expected to include only Japanese foreign obligors—historically strong and comparable to U.S. obligors—from the pool of 9,333 loans.

After a three-year absence, the deal will issue notes repaid from a pool of leases on 22 refinanced assets. Almost all the assets are narrowbody aircraft, representing 87.9% of the pool by value. One widebody accounts for 12.1% of the asset value.