Three equipment lessors, Ascentium Capital, CNH Capital and GE Capital, are in the market this week with over $1.7 billion of lease-backed securities.
Credit Suisse and Bank of America Merrill Lynch are the lead underwriters on Ascentium's deal, Ascentium Equipment Receivables 2015-1, the issuers third.
DBRS and Moody’s Investors Services assigned preliminary ratings to the transaction. A two-year A tranche and a three-year A tranche, both with initial hard credit enhancement of 26%, are rated AAA’/ Aaa’.
A four-year tranche with credit enhancement of 14.25% is split-rated; DBRS has it at 'AAA' while Moody’s plans to rate it three notches lower, at Aa3’.
The trust will also issue A’/A2’ rated, four-year, class C notes, BBB’/Baa2’ rated, five-year, class D notes and BB’/ Ba3’ rated, five-year, class E notes.
The issuer is a privately owned equipment finance company originating small-ticket equipment leases and loans to small- and medium-sized businesses throughout the U.S. Most of the financing is provided in the form of finance leases but some contracts may be in form of true lease agreements.
The main equipment types in the pool are medical equipment and fixtures and furniture (including display and storage equipment), which account for approximately 22% and 18%, respectively of the pool’s balance.
The weighted average FICO score (when the contracts are supported by personal guarantees) is 754, and weighted average FICO Small Business Scoring Service (SBSS) is 211, which is slightly better than the previous ABS sponsored by Ascentium in 2014. Approximately 67% of obligors have been in business for six or more years. In addition, slightly over 85% of the loans and leases in the expected Asset Pool are supported by personal guarantees, and only 0.85% of the leases and loans have a balloon payment feature.
Ascentium,headquartered in Houston, is owned by private equity firm Vulcan Capital and an investor group led by Luther King Capital Management. Although the issuer is a relatively new company, most of its senior management has worked together since 1994 at predecessor companies.
The issuer has access to several revolving bank warehouse facilities. The company also manages risk and diversifies its sources of funding by selling a portion of its excess exposures ($77 million over the most recent 12 months as of January 31, 2015) to other financial institutions.
CNH Capital, a more seasoned issuer of equipment lease securitizations, is marketing $782 million of senior bonds from its CNH Equipment Trust 2015-A transaction.
Moody’s plans to rate the four classes of senior notes on offer: the class A1 money market notes will be rated P-1’ and the class A2, A3 and A4 notes will be rated AAA’.
CNH provides financing for the purchase of agricultural and construction equipment. The current deal is similar to the issuer’s previous deal, CNH 2014-B with largely all of the assets in both deals comprised of receivables secured by agricultural equipment, both new and used. The collateral pool includes 16,621 contracts with an average original principal balance of $69,306 versus $73,233.22 in the CNH2014-B transaction. The receivables have a weighted average original term to maturity of 61.08 months and a weighted average remaining term of 56.41 months, and are approximately 4.68 months seasoned.
BofAML is the lead underwriter.
GE Capital’s deal will add another $564 million of securities to the equipment lease ABS pipeline.
Fitch Ratings plans to rate the money market tranche’ F1+’ and three classes of senior bonds AAA’. The class A2 notes are due November 2017, the class A-3 notes are due February 2019 and the class A-4 notes are due May 2023.
The class B notes, due May 2023 will be rated AA’ and the class C notes, due May 2023 will be rated A’. The senior bonds are structured with credit enhancement at 6.63%.
GE Equipment Transportation LLC, Series 2015-1 is backed by commercial loans, true leases and terminal rental adjustment clause (TRAC) leases on transportation equipment originated by GECC.TRAC leases give borrowers the option to purchase the equipment at the end of the lease term at a value determined when the lease starts.
While 2015-1 has a higher concentration of the weaker-performing small-fleet collateral than 2014-1, exposures are comparable to prior GEET transactions. Fitch stated in the presale that the higher concentration of transportation collateral in the pool reduces equipment and industry diversification.
However the issuer’s prior securitized transportation collateral has performed well within initial expectations, with consistent performance across the transactions, according to Fitch. BofAMLis also the lead manager on this deal.
Ascentium is owned by private equity company Vulcan Capital and an investor group led by Luther King Capital Management that has been around since 2011. As of December 31, 2014, their portfolio under management was approximately $590 million. Ascentium is headquartered in Houston, TX. Although the issuer is a relatively new company, most of its senior management has worked together since 1994 at predecessor companies.
The issuer has access to several revolving bank warehouse facilities. The company also manages risk and diversifies its sources of funding by selling a portion of its excess exposures ($77 million over the most recent 12 months as of January 31, 2015) to other financial institutions.
CNH Capital, a more seasoned issuer of equipment lease securitizations, is marketing $782 million of senior bonds from its CNH Equipment Trust 2015-A transaction.
Moody’s plans to rate the four classes of senior notes on offer: the class A1 money market notes will be rated P-1’ and the class A2, A3 and A4 notes will be rated AAA’.
CNH provides financing for the purchase of agricultural and construction equipment. The current deal is similar to the issuer’s previous deal, CNH 2014-B with largely all of the assets in both deals comprised of receivables secured by agricultural equipment, both new and used. The collateral pool includes 16,621 contracts with an average original principal balance of $69,306 versus $73,233.22 in the CNH2014-B transaction. The receivables have a weighted average original term to maturity of 61.08 months and a weighted average remaining term of 56.41 months, and are approximately 4.68 months seasoned.
BofAML is the lead underwriter.
GE Capital’s deal will add another $564 million of securities to the equipment lease ABS pipeline.
Fitch Ratings plans to rate the money market tranche’ F1+’ and three classes of senior bonds AAA’. The class A2 notes are due November 2017, the class A-3 notes are due February 2019 and the class A-4 notes are due May 2023.
The class B notes, due May 2023 will be rated AA’ and the class C notes, due May 2023 will be rated A’. The senior bonds are structured with credit enhancement at 6.63%.
GE Equipment Transportation LLC, Series 2015-1 is backed by commercial loans, true leases and terminal rental adjustment clause (TRAC) leases on transportation equipment originated by GECC.TRAC leases give borrowers the option to purchase the equipment at the end of the lease term at a value determined when the lease starts.
While 2015-1 has a higher concentration of the weaker-performing small-fleet collateral than 2014-1, exposures are comparable to prior GEET transactions. Fitch stated in the presale that the higher concentration of transportation collateral in the pool reduces equipment and industry diversification.
However the issuer’s prior securitized transportation collateral has performed well within initial expectations, according to Fitch. BofAMLis also the lead manager on this deal.
