Clarus Capital is preparing to sponsor a $310.1 million securitization of equipment finance contracts, working with Wells Fargo Securities as its structuring agent and bookrunner to sell the notes.
This is the second term securitization for the Clarus Capital Funding platform, which sold its inaugural batch of notes to investors through the 2024-1 series, according to Asset Securitization Report's deal database and Kroll Bond Rating Agency.
The sophomore outing follows a similar structure as the Clarus 2024-1, with six tranches of class A, B, C, D and E notes, according to KBRA and the database. The A2 tranche will issue the bulk of notes, $165.4 million, according to KBRA.
Principal will be allocated to the notes sequentially, according to KBRA.
Aside from the A1 tranche, which has a legal final maturity of April 20, 2027, all tranches in the deal will have a Nov. 20, 2034 legal final maturity according to the rating agency.
Underpinning the notes is a pool of 162 contracts with 28 obligors, with an average securitization value by contract of about $2.05 million. On average, the pool has an exposure of $11.8 million per obligor, KBRA said. Also, on a weighted average (WA) basis, the original and remaining contract terms are 52 months and 44 months, respectively, according to KBRA.
To boost credit to the notes, the capital structure includes overcollateralization, excess spread, a reserve account, and subordination for the senior classes, KBRA said. The O/C level will represent about 6.65% of the $332.2 million in the pool by the cutoff date.
Excess spread is also included, KBRA said, noting that it comes to about 2.15% per year of initial excess spread available to cover losses.
When the deal closes, a non-amortizing reserve account will be funded with 1.00% of the cut-off date. Also, the account will grow as a percentage of the current ASV as the pool pays down.
In terms of the industries represented in the pool of contracts, oil and gas companies account for the largest portion, 19.74%. Healthcare; containers, packaging and glass; telecommunications; and business services account for 19.51%, 12.66%, 12.66% and 8.93%, respectively, KBRA said.
As for the types of equipment being financed, the top five are computer & IT (27.06%), industrial and manufacturing (25.75%), material handling (15.18%), transportation – over the road (10.83%) and medical equipment (9.67%), according to the rating agency.
KBRA assigns AAA to the A2 notes; AA to the class B notes; A to the class C notes; BBB to the class D notes and BB to the class E notes.
