MassMutual Asset Finance is preparing to price $838.2 million in notes secured by lease and loan payments on large-ticket equipment, in a deal with a more diversified pool than previous ones.
The largest customer accounts for 15.4% of the pool, which is lower than the platform average of 20%, according to a presale assessment from FitchRatings. Based on the pool’s top five largest equipment types, the deal is more diversified than it has been since 2015, Fitch said.
Transportation equipment accounts for the largest collateral type in MMAF 2021-A, comprising 34.6% of the pool. Software (12.16%), energy management (10.49%), real estate (9.27%) and telecommunications (8.43%) make up the other collateral types in the pool.
Fitch is expected to give ‘AAA’ ratings on all classes of the five-tranche deal, except for the $155 million senior class, which it expects to rate F1+.
In another credit strength for the deal, Fitch found that the loans and leases in the collateral pool hadn’t experienced pandemic-related modifications. Similar to previous MMAF transactions, the obligors 2021-A primarily consists of large, corporate entities that have been resilient to economic pressures caused by widespread pandemic containment efforts.
That doesn’t mean the MMAF 2021-A is completely insulated from risk, especially related to negative economic impact from the coronavirus. If impacts are severe and prolonged, the notes’ ability to meet debt service requirements could be impacted.
Also, the pool has just a 7.5% exposure to the U.S. government as an obligor. It is the lowest for the platform, which averages 21%, and ranges from 11% to 46%.
