Cronos Containers is prepping its second container lease deal of the year, according to Standard & Poor’s.
Cronos Containers Program I Ltd Series 2014-2 preliminary will issue a single, $200 million tranche of notes with a preliminary A+’ rating from S&P.
Credit Suisse, Deutsche Bank Securities, Wells Fargo Securities, Nomura Securities, and RBC Capital Markets are the joint bookrunners.
The notes are backed by a pool of approximately $1.072 billion (net book value) portfolio containing 216,744 containers. This collateral will be shared with trust’s series 2012-2, 2013-1, and 2014-1 issued by the program.
Among the deal’s strengths, according to S&P, is the fact that approximately 80.6% of the portfolio comprises long-term leases and direct finance leases (DFLs), which are shielded from rate reductions during a downturn. Also, the pool is diversification among different marine cargo container types, most of which benefit from relatively stable demand.
Among its weaknesses, approximately 45.0% of the pool is held by the 10 biggest customers, the performance of which may affect the issuer's revenue receipts. Also, the DFLs could potentially be "recharacterized" as secured debt if the lessee files for bankruptcy.
