CNH Capital is in the market with a transaction called CNH Wholesale Master Note Trust Series 2011-1. The offering is managed by Deustche Bank Securities.
According to a DBRS presale report on the deal, CNH Capital has a long history of securitizing the assets in their wholesale portfolio. CNHMT was first established in 2003 and has issued eleven series. With CNHMT 2011-1, there will be seven series outstanding in the master trust totaling $1.953 billion of note capacity.
DBRS explained that CNHC extends revolving financing agreements to 1,507 domestic agricultural and construction equipment dealers. The sponsor only funds dealers that are CNH franchised dealers. This means that they have been approved on the manufacturerand captive finance company levels.
The receivables originated, DBRS said, are from financings for new and used agricultural and construction equipment as well as new parts for that equipment. Under the trust, receivables from dealers’ rent-to-own businesses and rental businesses are also financed. These assets comprise 17.5% of the pool balance.
CNH Capital America is an indirect wholly-owned captive finance subsidiary of CNH Global formerly known as New Holland.
Fiat Industrial (FI) owns a controlling majority of the common shares of CNHG through Fiat Netherlands Holding, a wholly owned subsidiary of FI.
The series 2011-1's credit enhancement for the Class A notes is 24.29%, according to the rating agency. This amount is from 7.87% subordination of Class B notes, 13.38% available subordination amount and 3.03% reserve account. Class B notes are propped by 13.38% available subordination amount as well as a 3.03% reserve account.
If noteholders are not repaid according to the expected schedule, enhancement will build since it mostly comprises subordinate notes that are locked out and a reserve account, which are also locked out until the senior notes are repaid.
The deal's two-tranche structure will comprise just less than a two-year interest only period, which has a short accumulation period. The Class A and B noteholders are expected to be paid principal on December 15, 2012.
For further preliminary information on the transaction from the ASR Scorecards database, please see the link below.