GreatAmerica Leasing is making its annual trip to the securitization market to finance small ticket equipment loans and leases.
The $490.34 million GreatAmerica Leasing Receivables Funding 2017-A will issue a money market tranche and three senior term tranches with preliminary AAA ratings from Fitch Ratings that mature in in April 2019, June 2020, and January 2023. All four tranches benefit from credit enhancement of 12.25%.
There is a subordinate tranche maturing in January 2023 rated AA and another maturing in January 2024 rated A.
The collateral mix in the latest deal is comparable to that of the prior transaction, completed in February 2016, with copiers and printers being the largest concentration at 66.58%; that’s slightly lower than 67% in the 2016 deal. This type of equipment has historically performed better than others in GreatAmerica’s portfolio, according to Fitch. The remaining top equipment types include telephone (8.53%), light industrial/construction (5.46%), computer hardware (5.17%) and automotive repair (4.46%).
Geographic and industry concentrations are stable, but concentration in the top obligors has increased slightly. The top obligor represents 1.46% of the pool and the top 20 represent 8.09% of the pool. This compares to top single obligors of 1.36% and 0.93% in the 2016-1 and 2015-1 transactions.
Texas has the highest state concentration in 2017-1 at 9.47%, down slightly from 10.41% in 2016-1 and 10.51% in 2015-1. Rounding out the top five are Florida (7.81%), California (6.42%), Ohio (4.47%) and Minnesota (4.32
The top five industries in 2017-1 comprise 83.23% of the pool, consistent with 84.02% of the pool in 2016-1. This is marginally lower than 85.88% in 2015-1.
Fitch expects cumulative net losses for 2017-1 to be 2.50%; in its presale report, it notes that seasoning on the proposed pool is relatively low at 9.19 months, and that it did not apply a seasoning credit.
Initial hard credit enhancement for class A notes decreased to 12.25% from 12.30% in 2016-1 and 12.90% in 2015-1.
Initial CE for class B notes is consistent with 2016-1 at 8.50% and down from 9.16% in 2015-1. Initial CE for class C notes is also consistent with 2016-1 at 5.75% and down from 6.25% in 2015-1.