Automotive Rentals Inc. is in the market with a $554.45 million securitization of fleet leases, according to Fitch Ratings.
ARI Fleet Lease Trust 201-A will issue a $192 million three classes of notes rated by Fitch Ratings, a $193 million money market tranche and two AAA’ rated tranches maturing in November 2018 and September 2023. All three benefit from credit enhancement of 8.35%.
Bank of America Merrill Lynch is the lead underwriter.
The fixed-rate notes will ultimately be backed by payments on a pool of open-ended vehicle fleet lease contracts for cars, light-duty trucks and other vehicles originated and serviced by ARI. This is the leasing company’s sixth U.S. term securitization offered by ARI under Rule 144A.
Among key rating considerations, Fitch said that the portfolio remains well diversified by obligor, compared with ARI’s previous securitization in 2014. The top five obligors by lease balance represent 14.35% of the pool, versus 14.46% in the previous transaction; however, top industry concentrations increased to 11.57%.
A majority of the pool (65.01%) is publicly rated by a nationally recognized statistical rating organization (NRSRO) with 40.37% of the pool carrying an investment-grade rating.
The 2015-A leases are all open-ended, meaning the lessees bear virtually all residual risk. Therefore, the trust is only exposed to wholesale market risk in the event of an obligor default. Even if default occurs, past vehicle dispositions have largely resulted in gains relative to book value.