Ratings of shipping container lease securitizations are closely tethered to those of their sponsors, and this once kept them in the triple-B range, before insurance. But recent transactions have garnered ratings as high as ‘A’, and analysts expect they could go even higher.
Container leases have always been trickier to securitize than leases on other kinds of equipment, such as railcars or aircraft. That’s because the leases tend to be short term: shipping companies own the bulk of their fleets, relying on leases of three to five years to manage fluctuations in demand to move goods around the world. However, term securitizations are typically structured with a 10-year expected maturity. This mistmatch means investors have to rely on managers of these deals to re-market containers that come off lease in order to generate cash flows to repay the notes.