A pool of open- and closed-end vehicle lease contracts on motor vehicles, including cars, light-duty trucks and other vehicles that Enterprise Fleet Management has originated and serviced, will secure $1.2 billion in notes issued through the Enterprise Fleet Financing 2024-3 transaction.
Potentially, the deal could be upsized to as high as $1.5 billion, according to ratings analysts at Fitch Ratings. Regardless of the deal's size, however, the credit enhancement arrangements will remain the same on a percentage basis, according to Fitch analysts. Initial hard credit enhancement is 7.29%, a marginal increase from 7.27% in the 2024-2 deal.
Credit enhancement on the fixed-rate notes includes overcollateralization that builds to a target of 7.79%; the senior-subordinate repayment structure; and a cash reserve account that will represent a target of 1.50% of the account balance.
The deal will feature exclusively open-end leases, at 99.05%, according to Fitch. Enterprise Fleet will issue notes through four class A tranches. The A1, A2, A3 and A4 notes have legal final maturity dates of July 21, 2025, April 20, 2027, Aug. 21, 2028 and March 20, 2031.
BofA Securities is the structuring lead, Fitch said, while JPMorgan Securities, Mizuho Securities and Société Générale are managers on the deal, according to Asset Securitization Report's deal database. Yields are expected to range from 5.45 on the notes rated A-1+ and F1+ by S&P Global Markets and Fitch, respectively, to 5.14% on the uniformly AAA rated notes. All the notes are considered senior, with the A2 through A4 notes rated AAA from both rating agencies, and are benchmarked to the three-month interpolated yield curve, the database said.
S&P notes that the transaction also has excess spread of about 5.66% on average. Enterprise Fleet, 2024-3, can withstands more than 5.0x of S&P's net loss range of 1.80%-2.00% under stressed cash flow modeling scenarios. This includes stresses on both excess spread and management fees.
Enterprise Fleet Management's lease portfolio has maintained low losses, even during the 2008-2009 financial crisis and recession, S&P said.
