Cronos Containers priced a $207 million marine cargo container lease securitization, according to an Interactive Data report.
The deal, Cronos Containers Program I (Series 2014-1), consists of a single tranche of Standard & Poor’s-rated A’ notes, with a weighted average life of 4.5-years. The transaction priced at swaps plus 145 basis points.
The deal's structuring agent and sole bookrunner is Deutsche Bank.
Cronos Series 2014-1 is collateralized by an approximately $848 million net book value portfolio containing 182,524 containers, a mix of dry-freight containers, refrigerated containers, tanks, cellular pallet-wide containers, half-height containers, among other types. Of these containers, 172,077 units are currently out on lease or a new factory unit; the remaining 10,447 are not leased.
This collateral will be shared with the series 2012-2 and 2013-1, also issued under Cronos Containers Program I.
Demand for cargo containers is primarily based on the volume of world trade, which follows economic cycles. Despite the 4% growth in 2014, the marine cargo container market is still below the historical average. But the container leasing market has relatively high utilization rates, causing tight supply, which S&P views as a strength for the deal.
Among the transaction’s weaknesses is that approximately 47.1% of the pool is held by the 10 biggest customers, meaning that poor performance at these companies could hurt the issuer’s revenue receipts. Also, since the containers will be leased worldwide, regional or local economic downturns could reduce the deal’s revenue.