Kubota Credit Corp. priced its inaugural term securitization, a $300 million transaction backed by agricultural, construction and turf equipment loans.
Fitch Ratings assigned preliminary ratings of AAA’ to the class A notes issued under the trust, Kubota Credit Owner Trust 2014-1. JP Morgan is the sole underwriter on the 144A transaction.
According to Interactive Data, the class A2 notes with a weighted average life of 1.44-years priced at 25 basis points over the eurodollar synthetic forward curve (EDSF).
The class A3 notes with a weighted average life of 2.76-years, priced at 33 basis points over interpolated swaps. The class A4 notes with a weighted average life of 3.81-years priced at 40 basis points over interpolated swaps.
The pool of collateral is comprised of 16,787 loans. The majority of the contracts included in the pool (87%) are retail installment loans secured by new agricultural equipment originated by Kubota Credit. In its presale report, Fitch noted that “agriculture collateral historically has been the best performer within KCC’s managed portfolio.”
According to the report, only 81% of the loans in the pool have FICO scores. However, these borrowers have strong credit quality and a weighted average FICO of 741. Borrowers in the remaining 19% of the 2014-1 pool are underwritten based on commercial standards.
The weighted average original term of the pool is 59.04 months and 95.46% of the loans have zero APR.
