By around April 16 Wheels Fleet Lease Funding 1, 2024-1 expects to close on a $750 million in securitization bonds secured by revenues from vehicle leases.
The collateral assets are special units of beneficial interest in leases and related vehicles owned by three origination trusts—Wheels LT, Donlen Trust and LP Origination Trust, which will also servicer their respective underlying loans, according to ratings analysts from DBRS Morningstar.
The bonds will begin paying interest on May 18 and will pay monthly until the notes' legal final maturity date in February 2039. The trust also has a 10-month revolving period, when the trust reinvests collections to maintain overcollateralization. OC starts at 3.53% of the pool balance, according to DBRS. One of two events will trigger an amortization of the notes sequentially—either the end of the revolving period or an amortization event, DBRS said.
Wheels Fleet's notes repay investors on a pro rata, pari passu basis, analysts said.
Aside from overcollateralization and subordination, the notes get support from a reserve account representing 0.96% of the pool. Wheels Fleet also has an incremental reserve account that requires the deal to maintain 1.00% of the outstanding principal balance should the three-month average charge-off ratio exceed 1.00%, or the three-month average delinquency ratio exceeds 6.00%.
Several other accounts bolster the notes, including a debt service threshold reserve and a yield supplement account, DBRS said.
Wheels Fleet's overall portfolio consists of medium to large corporate obligors with vehicle leases fleets that typically range from 250-5,000 vehicles, DBRS said. Lessors operate in a diversified range of industries. Pest control and disinfecting services, building materials and hardware, electrical apparatus and equipment, frozen fruits juices and vegetables and pharmaceutical and drug preparations represent the top five industries by aggregate securitization value, the rating agency said.
DBRS says it will assign ratings of AAA to the A1A and A1B notes, while the subordinate classes B and C got AA and A ratings, respectively. DBRS did not rate D and E.
Moody's, meanwhile, gives AAA ratings to the A1 through B notes; Aa1 to the class C notes; A1 to the class D notes; and Baa1 to the class E notes.
