Ascentium Capital, a private equity-owned equipment lessor, is marketing $277 million of asset-backeds, according to Moody’s Investors Service.
Ascentium Equipment Receivables 2015-2 Trust (ACER 2015-2) is a backed by loans and leases on small ticket equipment used for commercial purposes in physician offices, gas stations, hotels and restaurants, among others. It is Ascentium’s fourth securitization.
While the assets and structure are typical of transactions in this sector, there is a back-up servicer, U.S. Bank N.A., which also serves as custodian and indenture trustee, with the ability to quickly act if there is a servicer or transaction event of default. Personal guarantees support a majority of the leases, approximately 87%.
The 5,529 contracts have a weighted average original term of 56 months and a weighted average seven months of seasoning. The top three concentrations by state are California (19.44%), Texas (13.26%) and New York (7.01%).
Among risks cited by Moody’s are the relatively high concentration of contracts to physician’s offices, which represent 18.15% of the collateral pool. That is lower than the 19.66% concentration in a deal completed earlier this year, but higher than the 12.66% concentration in a deal completed in 2014. “If the healthcare industry experiences adverse events or economic conditions, the performance of the pool may be adversely affected,” the presale report notes.
Another risk cited in the presale report is the inclusion of a prefunding account, which Moody’s said could increase the volatility of the pool composition during the prefunding period. However, this risk is mitigated by concentration limits and certain third party review requirements of asset additions prior to actual prefunding.
Moody’s has assigned preliminary ‘Aaa’ ratings to two tranches of senior, fixed-rate notes, the A-2 tranche maturing in December 2017 and the A-3 tranche maturing in March 2019. There are also five tranches of subordinate notes with ratings ranging from ‘Aa2’ to ‘B2’ and an unrated money market tranche.
America Merrill Lynch and J.P. Morgan are the lead underwriters.
Ascentium, based in Houston, is privately owned by the management of Ascentium and funds managed by Luther King Capital Management and Vulcan Capital. It was organized in 2011. As of Sept. 30, 2015, the lessor’s portfolio under management was approximately $744 million.