Dell Financial Services plans to offer $1 billion of securities backed by a pool of equipment lease receivables.

The deal,called Dell Equipment Finance Trust 2015-1, is the issuer’s second stand-alone term securitization. It pools 24,535 contracts with a weighted average term of 3.7 years; borrowers have, on average, made 11 months of payments on the contracts.

Standard & Poor’s plans to rate the class A-1 money market notes maturing on April 2016 ‘A-1+’, the class A-2 notes that mature July 2017, ‘AAA’ and the class A-3 notes that mature March 2020, ‘AAA’. At the subordinate levels, the transaction will offer ‘AA’ rated class B notes, due March 2020, ‘A’ rated, class C notes, due March 2020 and ‘BBB’ rated class D notes due September 2020.

The deal is structured with a reserve account will be initially funded at 1.00% of the aggregate discounted contract balance. The reserve account is a liquid form of credit enhancement that provides protection against delinquencies

Bank of America Merrill Lynch is the lead manager.

Dell Equipment Finance Trust 2015-1 pools shorter-termed contracts compared with the terms on other small-ticket equipment pools rated by S&P. This is because of the “short useful life of the Dell technology assets compared with general purpose equipment found in other diversified small-ticket leasing pools," according to the presale report.

The pool also has significant seasoning (11.82 months), which S&P considered to be a strength “because the exposure period for losses is shorter”. However the rating agency did not give explicit credit to seasoning in its expected loss for the series 2015-1 pool because of the lack of “detailed historical static pool data at varying pool factor levels”.


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