Revenue from a portfolio of open-end fleet lease contracts will provide collateral for $629.73 million in asset-backed securities from the ARI Fleet Least Trust, 2024-A.
A majority of the leases are open-end contracts, where the lessees carry almost all of the vehicles' residual value risk on the vehicles, according to FitchRatings
The highly rated deal, ARI 2024-A, offers a diverse portfolio of assets, Fitch said. Most of the vehicles under finance are light-duty trucks, at 69.9%. The types of vehicles have been more concentrated in light- and medium-duty trucks, for a combined 83.8% of the portfolio, the rating agency said. The uses of the vehicles vary widely, with 'support activities for mining' accounting for 8.6% of the lease balance. That makes it the top industry represented in the pool, the rating agency said. Fitch analysts said this compares with a top industry concentration of 4.1% in the previous deal, the ARI 2023-B.
The largest obligor represents 2.9% of the pool, while the top five represent 14.0%, Fitch said. The pool is also geographically diverse, with
Mizuho Securities is lead underwriter on ARI 2024-A, which will issue classes A, B and C notes through five tranches. All of the tranches have a legal final maturity date of Nov. 15, 2032, except the A1 piece, which matures on March 17, 2025, Fitch said.
One of the deal's credit highlights is the ARI's minimal loss history since the publicly registered lease securitization program was established in 2010. Just one of the previous transactions, whether paid off or outstanding, had experienced a loss, the rating agency said. That was the ARI 2021-A, and that transaction experienced a loss of just 0.02%, Fitch said.
All of the class A notes benefit from the same total credit enhancement level, 11.25%, while the class be notes are covered to 9.25% and the class C notes, 7.25%.
About 465 obligors are in the pool, and they have an average balance of $1.4 million. Those entities represent some 17,082 leases, with an average lease balance of $39,534. On a weighted average (WA) basis, the leases have an original term of 60 months, with 12 months of seasoning. Most of the obligors, 67.5%, have a rating agency rating.
Fitch assigns an F1+ rating to the A1 tranche; AAA to the A2 and A3 tranches; AA to the class B notes and A to the class C notes.
