Loan and lease contracts on transportation, construction and industrial equipment will provide the revenue to secure the $406.3 million in asset-backed securities from sponsor Amur Equipment Finance, its thirteenth go-around for financing similar collateral.
The most senior of the notes, the class A1s, have a legal final maturity date of Jan. 21, 2025, while the A2, B, and C notes mature on Jan. 21, 2031. After that, the class D notes mature on April 21, 2031, and the class E notes mature on April 20, 2032. All of the notes have initial overcollateralization levels of 8.25% and initial reserves of 1.00% of the pool balance, the rating agency said. Initial hard credit enhancement amounts to 31.00% on the A1 and A2; and 24.40% on the class B notes.
Early pricing talk for the notes ranges from 26-28 basis points over the three-month interpolated yield curve on the A1 notes, putting it at par. The class E notes are expected to price at 585-600 basis points over the same benchmark.
Among the deal's positive credit traits is a granular collateral pool, according to Moody's. Some 3,938 contracts compose the collateral pool, and they have an average contract balance of $89,962. Also, the top obligor makes up 0.48% of the pool, and the top five obligors make up 1.65% of the pool, the rating agency said.
The rating agency also points to a manual detailed underwriting process, which it regards as a strength over automated underwriting. Amur provides financing for equipment that is essential for borrowers' business operations, according to Moody's. That gives them incentive to prioritize Amur Financial's debt servicing over other expenses, including unsecured debt, the rating agency said. Amur Financial is also an experienced sponsor and servicer.
Yet Amur's positive trait as sponsor and servicer is also a potential drawback, Moody's notes, because it is also relatively small in scale and unrated. UMB Bank is on the deal as a backup servicer, Moody's said.
Moody's expects to assign ratings of P1 on the A1 notes; Aaa on the A2 notes; Aa1 on the class B notes; A1 on the class C notes; Baa3 on the class D notes; and B3 on the class E notes. S&P Global Ratings meanwhile, assigns ratings of A1+ to the A1 notes; AAA to the A2 notes; AA to the class B notes; A to the class C notes; BBB to the class D notes and BB to the class E notes.
