A portfolio of small-ticket equipment such as copiers, printers networking and other office equipment will secure $750 million in asset-backed bonds, through the DLLST 2024-1 transaction, according to DLL Group.
De Lage Landen Financial Services is sponsoring the deal, which will issue four tranches of class-A notes through a structure that will repay investors sequentially, according to ratings analysts at Moody's Investors Service. The underlying pool of equipment leases has had strong credit performances since 2010, according to analysts. As of Sept. 30, 2023, annualized net losses, as a percentage of the average managed portfolio, was 1.02%.
Among the 47,147 contracts, the pool is diversified across many different obligors and across different industries, Moody's said, and they have an average contract balance of $18,129. The top borrower accounts for 0.8% of the pool balance, while the top 10 borrowers represent 4.2%, according to Moody's. Seasoning is also a plus, as the leases have a weighted average (WA) age of 13 months.
J.P.Morgan Securities, BofA Securities, RBC Capital Markets and SG Americas Securities are lead underwriters on the deal, which is slated to close by the end of this week.
In terms of pricing expectations, all of the notes are benchmarked to the three-month interpolated yield curve, according to the Asset Securitization Report's deal database. Guidance ranges from 26-28 basis points over the 3-month, I-Curve on the A1 notes to 115-125 bps over the 3-month, I-Curve on the A4 notes.
All of the notes have total hard credit enhancement of 13.0%. The notes have legal final maturity dates that range from Jan. 21, 2025 on the class A1 notes to April 22, 2030 on the A4 notes, according to Moody's.
Moody's says expects to assign ratings of P1 to the A1 notes; and Aaa to the A2 through A4 notes; while Fitch Ratings intends to assign ratings of F1+ to the A1 notes and AAA to the A2 through A4 notes.
