Cronos Containers is getting ready to set sail with a $207 million marine cargo container lease securitization, according to a presale report published by Standard & Poor’s.
The deal, Cronos Containers Program I (Series 2014-1) will be 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 issued under the Cronos Containers Program I.
Demand for cargo containers is primarily based on the level of world trade, which correlates with economic cycles. Despite the 4% growth in 2014, the marine cargo container market is still below the historical average. However, 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 the performance of these companies may affect the issuer’s revenue receipts. Also, since the containers will be leased worldwide, regional or local economic downturns could reduce the deal’s revenue.
The $207 million single Series 2014-1 tranche of notes received A’ ratings from S&P.
The structuring agent and sole bookrunner for the deal is Deutsche Bank.
Cronos Containers issued a Series 2013-1 transaction in April 2013. The $300 million sea container- backed deal was assigned A’ ratings from S&P.