The latest securitization from Barings Equipment Finance will raise $1 billion from investors, backed by leasing contacts on a range of equipment related to transportation, federal energy, machinery, furniture and fixtures.
Like a couple of recent transactions, Barings Equipment Finance, series 2025-B, will not have a sub-servicing arrangement in place when the deal closes, according to Moody's Ratings.
This deal will issue notes to investors through four tranches of class A notes, and one tranche of class B notes. Maturities range from November 2026 on the A1 notes to September 2050 on the A4 and B tranches, according to Moody's. MassMutual Asset Finance (MMAF) is sponsoring the deal, and gets a vote of confidence from Moody's as a strong servicer.
"Delinquencies of loans and leases originated by MMAF have been consistently low," analysts said in a presale report. Although delinquencies have increased, they have been negligible, at just 0.28% of the managed pool's outstanding balance.
Lead bookrunners J.P. Morgan Securities and BofA Securities are expected to close the deal by October 15.
The pool is of strong credit quality, Moody's said. The 378 contracts were extended to 105 obligors at mid- to large-size companies, and they have strong credit profiles, Fitch Ratings said. The asset pool has a weighted average rating factor (WARF) of about 750, which equals a credit quality of about Ba1. That looks eroded compared to a the MMAF 2025-A, which had an equivalent credit quality of Baa3, Moody's said.
Contracts have an average balance of $2.7 billion, Fitch said.
Several components also make for a strong transaction structure. The credit enhancement for class A notes will grow over time as excess spread is applied to pay down the notes, and that will increase overcollateralization, Moody's said.
Total hard credit enhancement, which includes an initial reserve of 0.50%, equals 9.75% of the note balance on all the tranches, Moody's said.
The A2 and A3 notes, which Moody's rates Aaa, account for the bulk of the assets, about 63%.
Moody's assigns P1 to the A1 notes and Aaa to the A4 notes. Fitch assigns F1+ to the A1 notes and AAA to the A2 through A4 notes. KBRA assigns K1+ to the A1 notes; AAA to the A2 through A4 notes; and A to the class B notes.
