Another portfolio of agricultural, construction and utility vehicles, plus other equipment leases, will secure $733 million in asset-backed securities (ABS) from the Kubota Credit Owner Trust, series 2025-2.
Kubota Credit Corp., the deal sponsor, had relied on a group of managers--including JP Morgan Securities, Bank of America Securities and Mitsubishi UFJ Securities—to bring its previous deals to market, until the series 2025-1 notes, when it concentrated on one manager, according to Asset Securitization Report's deal database.
In addition to sponsoring the deal, Kubota Credit originated the 29,280 contracts in the pool and will service the transaction, Moody's Ratings said.
The rating agency notes that it expects a cumulative net loss of 0.85% of the KCOT 2025-2 asset pool. Expected losses at the Aaa stress level is 6.50%, according to Moody's.
The current series comes to market through Mizuho Securities as lead underwriter, according to Fitch. Notes will be issued through four senior tranches, classes A1, A2, A3 and A4, with maturities of July 14, 2026, May 15, 2028, Sept. 17, 2029 and Nov. 15, 2030, respectively.
All the notes benefit from credit enhancement equaling 4.75% of the note balance, Fitch said. Credit enhancement includes an initial reserve account representing 0.50% of the pool balance, Moody's said. The deal also benefits from initial overcollateralization representing 4.25%, Moody's said.
Agricultural equipment accounts for 50% of the pool balance, with construction, RTV and turf equipment accounting for 33.0%, 10.0% and 7.0% of the pool, respectively. Almost all the equipment is composed of leases on new equipment.
The portfolio is highly diversified by several measures, according to Moody's. Geographically speaking, Texas, Florida and Georgia account for 11.92%, 6.18% and 5.76% of the pool. The top lessor accounts for only 0.20% of the pool, while the top five represent 0.61% and the top 10 account for 0.92%.
Borrowers has an average contract balance of $29,289, while borrowers had an original FICO score of 742, Moody's said.
Moody's assigned ratings of P1 to the A1 notes and Aaa to the A2 through A4 tranches. Fitch assigned F1+ to the A1 notes and AAA to the A2 through A4 tranches.
