Alliance Laundry Systems has completed its first laundry equipment finance securitization in two years.
The issuer, who was last in the market in 2013, sold $400 million of A’, Standard & Poor’s rated securities. The notes are backed by pool of equipment loans, leases and trade receivables financing the purchase of laundry equipment.
Alliance provides laundry equipment for laundromats, multi-housing laundries and on-premises laundries. Alliance sells the equipment to a network of 1,200 distributors and route operators. The distributors re-sell and install the equipment for laundromat and on-premise end-customers. Route operators purchase equipment and then obtain leases from multi-housing property managers to place the equipment into common laundry rooms.
The issuer, which has been around since 1908, can provide the type of historical data that makes investors and rating agencies comfortable with predicting cash flow performance. The notes are also structured with sufficent credit enhancement. According to the S&P press release, credit enhancement for the notes consist of overcollateralization, letter of credit, reserve account, and excess spread; and totals approximately 16%. The rating agency did not publish a presale report on the deal.
A source familiar with the deal said that the Alliance placed the transaction with a limited number of investors, familiar with its asset; and since it was not widely distributed, no presale was published. “Alliance may not be a regular name but its done several deals since the late 1990’s,” said one source familiar with the issuer.
The previous transaction was rated by DBRS.
S&P rated the latest deal as a straight up equipment finance securitization, as did DBRS in the 2013 transaction. According to S&P, year to date equipment/fleet lease ABS issuance is $11.5 billion, with equipment accounting for $8.3 billion of that.