Dell Equipment Finance Trust is returning to the securitization market to raise $925 million in asset-backed bonds, which will be collateralized by commercial leases and loans on Dell-branded, small-ticket equipment.
The obligor pool is diverse and comprises companies of fairly sound credit quality, according to ratings analysts from Fitch Ratings. Respectively, the largest obligor in DEFT 2023-3, the top 10 obligors and the top 20 obligors represent 4.9%, 28.93% and 39.93% of the collateral pool. Also, these levels are lower than they were in the DEFT 2023-2 deal, which came out in June, and the DEFT 2023-1, Fitch said. Also, the top 10 obligors in the pool are investment-grade entities, the company said.
Looking at the pool from its industry concentration, the services sector accounts for the largest percentage of the pool, with 46.91%, manufacturing accounts for 20.04% and the finance, insurance and real estate sector represents 11.44%.
DEFT 2023-3 is slated to close on Oct. 31, according to the Asset Securitization Report's deal database. The transaction will issue notes through six classes of notes and repay investors through a senior-subordinate structure. The database noted that excess spread, a cash reserve account and overcollateralization are other means of bolstering the timely repayment of notes.
Fitch notes that initial hard credit enhancement on classes A, B, C and D are 12.00%, 9.50%, 7.25% and 5.25%, respectively. The reserve account is funded at 1.00% of the aggregate discounted contract balance, the rating agency said. While most of the classes benefit from subordination, the class D notes do not, Fitch said. Also, the deal has 2.97% of excess spread on a lifetime basis.
Some 6,592 contracts are in the pool, with an average principal discounted balance of $146,559 and on a weighted average (WA) basis they have an original term of 43 months, with 10 months of seasoning.
The notes have legal final maturity dates that range from Oct. 22, 2024 through Oct. 22, 2029, and it expects to assign ratings of 'F1+' to the class A1 notes; 'AAA' to the A2 and A3 notes; 'AA' to the class B notes; 'A' to the class C notes and 'BBB' to the class notes.
