Massachusetts Mutual Life Insurance is marketing an unusually large offering of bonds backed by equipment loans and leases.

Fitch Ratings and Moody's Investors Service have both assigned preliminary ratings to six senior tranches of notes totaling $1.064 billion to be issued by MMAF Equipment Finance Series 2017-A.  There is a $145 million money market tranche and five tranches of term notes rated triple-A: $235 million maturing in May 2020, $225 million maturing in February 2022, $213 million maturing in August 2024, $130 million maturing in July 2027, and $116 million maturing in November 2039. All benefit from 10% credit enhancement.

MMAF does not originate contracts; it purchases them from approved syndicators.  The collateral for this transaction includes large-ticket equipment loans and leases, and related rights.

The deal is MMAF’s eighth securitization.

Obligor, industry, equipment type and geographic concentrations are consistent with those the sponsor’s prior two transactions. The top obligor is the U.S. government, at 33% of the pool, up from 22% in 2016 transaction and 11.6% in the 2015-A transaction. The top 10 obligors compose 63.9% of the pool, the highest percentage of any MMAF transaction to date, according to Fitch.

The pool includes a similar number of contracts as the two prior deals, though the average balance is larger, at just over $3 million, compared with $2.4 million in the 2016 transaction. The contracts also have a longer weighted average term of 125 months, up from 92 months, though the seasoning is roughly the same (13 months vs 12 months).

Transportation and federal energy equipment are again the two largest types of collateral, accounting for just over half of the pools. Washington DC and Texas are again the biggest geographic concentrations.

J.P. Morgan Securities is the lead underwriter.

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