Automotive Rentals Inc. plans to issue a $535.2 million auto fleet lease securitization to be issued from the ARI Fleet Lease Trust.
The 2014-A, fixed-rate notes are backed by payments on a pool of open-end fleet lease contracts for cars, light-duty trucks, and other vehicles originated and serviced by Automotive Rentals.
Fitch Ratings expects to assign the class A1, money market tranche an F1’ rating; the class A2 and A3 notes have a preliminary AAA’ ratings. The notes are structured with 8.50% credit enhancement.
This is the issuer’s fourth U.S. term securitization offered under Rule 144A. Automotive Rentals was last in the market with a deal in March 2013.
According to Fitch's presale report all of the leases included in the 2014-A pool are open-end, where the lessees bear all residual risk. “The trust is only exposed to wholesale market risk in the event of an obligor default,” explained Fitch. “Even if default were to occur, past vehicle dispositions have largely resulted in gains relative to book value.”
ARI’s first transaction, 2010-A, paid in full in Sept. 2012 with no losses. 2012-A, 2012-B, and 2013-A are at pool factors of 37%, 51%, and 63%, respectively, all without losses.
The pool of collateral backing 2014-A transcaction includes 303 obligors. The weighted average seasoning is 16 months. The vast majority of leases expire between 25 and 60 months from the cut-off date of this pool.