The Enterprise Fleet Financing platform is preparing to float $800.2 million in asset-backed securities (ABS) collateralized by 35,020 open- and closed-end vehicle fleet lease contracts, in one of the smallest collateral pools since the 2019-1 transaction.
The EFF 2019-1 deal, which priced in March that year, issued about $1 billion to finance 38,974 leases. Since then the program’s collateral pool size has fluctuated before dipping down again, according to Fitch Ratings, which intends to assign ratings to the three classes of notes.
J.P. Morgan Securities is the lead underwriter on the transaction, which is expected to close on November 2, according to S&P.
Known as EFF 2021-3, the deal is the 26th U.S. term securitization under Rule 144A. Class A-1, which will issue about $209 million in ABS plus the A-2 and A-3 classes, are expected to receive ‘F1’ and ‘AAA’ ratings. S&P Global Ratings expects to assign similar ratings to the notes, according to that agency.
All of the notes have the same level of credit enhancement, 8.3%, which is generally comparable to previous transactions, and only marginally higher than the credit enhancement on the EFF 2021-2.
Enterprise Fleet Management originated the lease contracts and will service them, according to Fitch.
S&P notes that the transaction has annual excess spread of about 4.3%, on average on an unstressed basis. The rating agency also notes that the transaction can withstand more than 5.0x its net loss range of 1.55%-1.75% under its stressed cash flow scenarios. Those scenarios include stresses on excess spread and management fees.
Open-end leases account for virtually the entire pool, with a representation of 98.1%. Under open-lease terms, the lessee bears residual risk at the end of the original lease term, Fitch said.
Most of the lessees are medium-sized companies, according to Fitch, with construction accounting for 8.2%. The top five industries account for 26.4% of the pool.
Broken down in terms of collateral type, light-duty trucks account for 81.9%, followed by cars, which represent 13.0%, and medium-duty trucks, with 4.8%. The deal is also geographically diverse, with Texas accounting for 13.8% of the pool, followed by California, with 11.8% and Florida 8.4%.
