Hewlett-Packard Financial Services is preparing to sponsor $895.2 million in securitized bonds backed by revenue from fixed-rate operating leases, finance leases and loans that finance business critical technology equipment and other properties, including software.
Moody's Investors Service noted that the collateral pool is composed of high credit quality assets and an experienced servicer, among other positive deal characteristics. Regarding the high quality of the assets, contracts to obligors that are large institutions make up about 88% of the discounted pool balance. Also, the contracts terms are relatively low. On average, the contracts in the collateral pool have a remaining term of 38 months, while contracts with remaining terms of 35 months or less make up 51.5% of the discounted pool balance, Moody's said.
BofA Securities is the lead underwriter on the deal, which is expected to close on Jan. 31, 2024.
HPEFS Equipment Trust 2024-1 will issue the notes through A, B, C and D notes in six classes, and a senior-subordinate structure, according to Moody's and S&P Global Ratings. The most senior tranche of notes, A1, has a legal final maturity date of Jan. 21, 2025, while the A2 through D tranches have legal final maturity dates of May 20, 2031, both rating agencies said. All of the notes are fixed, the rating agencies said.
Moody's expects to assign ratings of P1 to the A1 notes; Aaa tp the A2 through B tranches; Aa1 to the class C notes and A2 to the class D notes. S&P will assign an A1+ rating to the A1 tranche; AAA to the A2 and A3 notes; AA to the class B tranche; A to the class C notes and BBB to the class D notes.
Credit to the notes is bolstered by a cash reserve account, funded at closing, that equals 1.00% of the initial discounted contract balance, as well as annual excess spread amounting to 1.76%.
