Dell Financial Services, a joint-owned venture of Dell and The CIT Group Inc., has taken the reins as master servicer in CIT's recently priced CITEC 2004-DFS equipment-backed offering, a first for the financing arm of the computer giant.

"On prior transactions, CIT was named the official servicer," said Moody's Investors Service analyst Anna Nechitailo. "On this deal, CIT is named as subservicer and has a cash management responsibility.

DFS currently services a portfolio of more than $4 billion in receivables.

The roughly $447 million offering came via Merrill Lynch. The triple-A rated Class A2 notes with a 1.2-year average life priced at eight basis points over EDSF.

The offering also marks the first time that collateral in a CIT deal is 100% DFS-originated. The preceding CITEC 2004-VT1 deal was comprised of roughly 50% DFS-originated collateral. The remainder of the collateral in that deal consisted of Avaya telecom equipment and other small-ticket items.

A cumulative net loss trigger has been incorporated in the structure on the CITEC 2004-DFS deal - a new feature for a CIT deal - which causes the structure to pay sequentially, according to a Moody's presale report.

The senior/subordinate structure is similar to the one used in prior deals. Credit support for the notes consists of subordination and a cash collateral account. Subordination provides 6.75% support for the Class A notes, 4% for the Class B notes and 2% for the Class C notes. The CCA is funded with an initial amount of 7.75% of the initial contract pool balance with a requirement equal to the greater of either 8.25% of the outstanding note balance plus the excess that the note balance exceeds the pool balance, or 1.5% of the initial contract pool.

The trust holds 41, 658 commercial lease contracts for both mid- and small-ticket leases. The pool is made up of roughly 36% desktops, 30% notebooks and 14% servers, and benefits from a diverse geographic concentration. The largest concentrations lie in Texas, California, New York and Florida. The top five obligors, all of them investment grade, make up close to 10% of the statistical contact principal balance.

Copyright 2004 Thomson Media Inc. All Rights Reserved.

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