CNH Industrial Capital America is preparing to sponsor a $872.6 million securitization of revenue from retail installment contracts on new and used equipment serving the agricultural sector, primarily, and construction.
The securitization pool can be upsized to $1.3 billion, with 11,069 contracts, from the initial $872.6 million, with 7,766, according to ratings analysts at Moody's Ratings. The deal, CNH Equipment Trust, 2025-A, will sell notes to investors through five tranches of notes, all class A.
Regardless of the pool size, several aspects of the deal are the same: total hard credit enhancement will represent 4.5% of the note balance, and initial reserves amounting to 2.0% of the pool. The notes also benefit from 2.50% in overcollateralization, according to Moody's.
The notes will repay investors sequentially, have legal final maturity date ranging from March 16, 2026 on the P1-rated A1 notes, through Sept. 15, 2032 on the A4 notes. New Holland Credit will service the assets in the collateral pool, Moody's said, adding that it is also on the deal as CNH 2025-A's administrator.
As for ratings, Moody's assigned P1 to the A1 notes, and the A2 through A4 notes all receive Aaa ratings, the company said.
Some of the deal's credit strengths include strong performance in CNH's managed portfolio, Moody's said, after cumulative net losses and delinquencies exhibited stable performance in recent years and returned to their performance in pre-COVID periods.
Yet the contracts in the collateral pool are heavily derived from agricultural equipment, which exposes the pool to potential single-industry risks. Agricultural equipment accounts for 90% of the contracts in the base portfolio and 87% in the upsized pool, Moody's said. While the sector is expected to be more resilient than others, declines in corn and soy prices since 2022 is contributing to a slowdown in farm equipment sales.
The pool is also geographically diverse, with Illinois, Iowa, Texas, North Dakota and Minnesota accounting for 8.1%, 6.4%, 5.8%, 5.7% and 5.6% of the pool, respectively.
