A pool of small-ticket equipment leases and loans is securing the GreatAmerica Leasing Receivables Funding, 2021-2, which is expected to issue about $514 million in asset-backed securities to investors.
Office imaging equipment, such as photocopiers, comprises about 67.5% of the collateral pool, which contains about 31,186 loan and lease contracts, according to FitchRatings. Other collateral includes automotive repair (6.54%), light industrial and construction equipment (6.14%), plus computer hardware and medical, dental or veterinary equipment in much smaller percentages.
The level of office imaging equipment is largely in line with recent deals, such as the GreatAmerica 2021-1, where imaging equipment made up 67% of the portfolio, Fitch said.
Wells Fargo Securities is lead manager on the transaction, with GreatAmerica Financial Services acting as the sponsor and servicer on the deal, among other roles. A cash reserve account and overcollateralization provide credit enhancement on the deal, Fitch said.
Total hard credit enhancement for the A, B and C notes are 12.0%, 8.2% and 5.5%, respectively, and have not changed since the 2018-1 transaction.
On average each loan has a principal balance of $17,407. On a weighted average (WA) basis, according to Fitch, they have had original terms of 55 months and WA seasoning of seven months. Fitch noted that the seasoning on the GreatAmerica 2021-2 transaction has been decreasing lately. It is the lowest seasoning since 2013-1, but Fitch also noted that there was a lack of well-seasoned loan collateral on the deal mostly due to the transaction’s timing.
Service-based companies make up 45.2% of the pool, the largest concentration. Retail trade follows with a 11.0% concentration; then wholesale trade, with 8.4%; finance, insurance and real estate, with 8.2% and manufacturing, with 7.5%, Fitch said.
The portfolio is highly diversified by obligor, with the top 20 accounting for just 8.1% of the pool, Fitch said.
Fitch expects to assign F1+ ratings to the $108 million A-1 class; and ‘AAA’ ratings to the A-2 through A-4 classes. Otherwise, the class B notes are expected to be rated ‘AA,’ and ‘A’ on the class C notes. The notes vary in legal final maturities from October 2022 for the most senior class to September 2028 on the subordinate class.
