Enterprise Fleet Management plans to issue $801.2 million of notes backed by payments on a pool of open-end and closed-end vehicle fleet lease contracts they originated and service.
Bank of America Merrill Lynch, JP Morgan and RBS Securities are the lead underwriters.
Fitch Ratings and Standard & Poor's assigned the deal, Enterprise Fleet Financing, LLC Series 2014-1, preliminary ratings. The class A1, short-term, money market fund note is rated F1’/ 'A1+' respectively. The class A2 and A3 notes are rated AAA’/ 'AAA'. The notes have a credit enhancement of 8.90%.
In the presale report, Fitch notes that the pool has a strong lessee diversification of 3,984 obligors and is more diversified that the issuer’s last two securitizations. The top obligor represents 0.64% of the pool, down from 1.12% in the 2013-2 deal. Furthermore, the top 20-obligor concentration has decreased to 8.28% from 8.77% in 2013-2.
The trust has limited exposure to closed-end residual risk, where the issuer bears the residual risk. Closed-end leases in the deal have decreased to 3.9% versus 5.4% in 2013-2. Approximately 96% of the 2014-1 leases are of the open-end type where the lessees bear the residual risk.
Residual value,which is estimated at the start of the lease, is the value of a leased vehicle at the end of the scheduled lease period. Losses in auto lease deals stem from vehicle resales, where the sale price falls below the residual value of the vehicle.