A securitization of cargo container leases is getting ready to launch into the market, according to a pre-sale from Standard & Poor’s.
The deal is split into two tranches: an A-1 worth $144 million and an A-2 for $136 million. S&P rated both ‘A (sf).’
The A-2 notes are time subordinated to the A-1 trance. The A-1 piece amortizes in four years and any additional principal payments flow first to the A-1 notes. It is only once the A-1 piece is fully paid off that those flows start paying off the A-2 tranche.
The legal final maturity is November 2028. Collateral consists of a portfolio of 216,854 containers with a net book value (NBV) of $427 million.
The issuer, Global Container Assets 2013, has the right to operating income from the containers and any residual cash from their sale.
BNP Paribas Securities is the structuring agent and underwriter.
Among the transactions’ strengths is the fact that viable containers are rarely idle. This is due to “modest growth in global trade and below-historical-average production of container,” according to S&P.
In addition, the portfolio is divvied up among six managers, lending the transaction an operational diversity. The servicer, BCA 4 Partnership, monitors the managers, which include Textainer Equipment Management, Dong Fang International Asset Management, Raffles Leases Pte., SeaCo SRL, Florens Management Services and Cronos Containers. All are seasoned in the container leasing market.
But the containers are also quite seasoned, which is a negative for the transaction. By NBV, the containers are on average 5.81 years old, a bit longer in the tooth than the more typical one-to-two years old. Another potential downside is that managers could conceivably compete with the transaction if the deal’s containers and their own containers are up for leasing at the same time.