Charlotte, N.C.-based Commercial Credit Group (CCG) is sponsoring its 13th securitization of transportation- and construction-equipment financing contracts, in a $336.2 million transaction.
According to ratings agency presale reports, CCG is pooling 1,603 loan-and-lease contracts to secure $327.8 with preliminary triple-A ratings from Fitch Ratings and Moody’s Investors Service.
Fitch and Moody’s applied their highest short term ratings to a $74.7 million Class A-1 money-market tranche, as well: F1 by Fitch, P-1 by Moody’s.
The commercial financing contracts are secured predominantly by construction, machine tool, transportation and waste equipment. The contracts have an average value of $209,749, with weighted average original terms of 51 months (includes seven months of seasoning).
Most of the contracts (44.7%) were to firms in the transportation sector; the highest proportion of equipment types included tractors (17.1%), excavation equipment (9.4%), and dump trucks (7.9%).
Since CCG primarily targets smaller firms, obligors have largely unknown credit characteristics for ratings agencies to fully assess borrower risks; however, CCG has had primarily strong performance in delinquencies and net losses in its prior securitizations for the contracts it services. The $1.2 billion managed portfolio (as of Dec. 31) had only a 2.7% delinquency rate, according to the ratings agency reports.
Moody’s has a cumulative net loss expectation of 2.5% in its first-time rating of a CCG deal. Fitch has a slightly higher projection of 3.25% net losses, driven by some weakening in 2015 and 2016 ABS transactions sponsored by CCG (which is majority owned by BDT Capital).
The deal underwriters include Wells Fargo, BMO Capital Markets, JPMorgan and Truist.
