Factory orders for durable goods might have dropped significantly, according to the U.S. Commerce Department figures released last week. However, the dip is apparently not enough to undermine performance on leases for transportation and equipment, which secure GE Capital's latest midticket equipment term ABS deal. Indeed, performance on the issuer's underlying collateral have been so strong that the reduced initial credit enhancement levels and incorporated a smaller reserve account and a step-down mechanism in its latest deal structure.
The $1 billion transaction, GE Equipment Midticket LLC, 2006-1, is GE Capital's fourth such deal to come to market and priced last week. Morgan Stanley is acting as lead manager on the transaction.