The Canadian subsidiary of CNH Industrial is sponsoring a securitization of its agricultural equipment loan receivables, four months after the parent company pursued a similarly asset-backed portfolio of its U.S. contracts for farming, industrial and construction equipment.
The bonds are being issued through CNH Capital Canada Receivables Trust Series 2016-1, which is comprised of CAN$515 million (US$403.67 million) in Class A notes and CAN$11.05 million (US$8.7 million) Class B notes. Moody’s Investors Service assigned an ‘Aaa’ rating to the Class A notes and an ‘A2’ rating for the B notes.
The Moody’s ratings are similar to CNH Canada’s last securitization in September in a CAN$510.7 million issuance through its CCCRT trust vehicle.
The trust’s bonds are backed by loans originated by CNH Canada, a unit of U.S.-based CNH Industrial Capital LLC, one of North America’s largest agricultural equipment loan and leasing providers.
CNH Capital Canada is including only loans in its transactions, compared to the loan/lease securitization that took place with its U.S. parent in February. More than 95% of the loans in the pool balance are for new and used agricultural equipment. The remainder is for construction equipment, according to Moody’s.
Moody’s stated the ‘Aaa’ rating is supported by the 2016-1 transaction’s expected net loss accumulation of 0.6% - which it based on the historic performance of the static pools of previous quarterly CNH Canada originations.
That solid performance led a Moody’s decision in April to upgrade the ‘B’ notes in four outstanding series of CCCRT notes issued since 2013.