MassMutual Asset Finance getting ready to sell $1.1 billion in securitized revenue from a pool of leases on equipment, including those related to federal energy operations, transportation and software. The notes will be offered to investors through the MMAF Equipment Finance 2024-A trust.
BofA Securities is lead underwriter on the deal, which will issue four tranches of class-A notes, according to ratings analysts from Moody's Investors Service. MassMutual Asset Finance will service the notes, but the transaction won't have a subservicer, Moody's said. Also, BofA serves as joint bookrunner on the deal with Wells Fargo Securities, according to a pre-sale report from Kroll Bond Rating Agency.
In early pricing guidance on the transaction, the A1 notes may come in at 25-27 basis points over the three-month interpolated yield curve, while the A4 notes could price within an estimated range of 120 to 125 basis points, according to the Asset Securitization Report's deal database. The deal is slated to close on January 24.
The publication's tally also noted that analysts from both Fitch Ratings and Kroll Bond Rating Agency would also assess the notes. Moody's assigns a rating of Prime 1 to the A1 notes; and Aaa to the A2 through A4 tranches. Fitch assigns F1+ to the A1 notes; and AAA to the A2 through A4 notes; and KBRA assigns K1+ to the A1 notes, while giving AAA to the A2 through A4 tranches.
Analysts agree that the pool's exposure to commercial obligors, 78% of which have investment grade credit characteristics, lends a credit boost to the transaction. Within that majority, payments from the U.S. government account for the largest concentration, 26.75%, according to the Kroll Bond Rating Agency.
Moody's meanwhile, noted that the weighted average rating factor of the securing leases and loans is about 500, which is about the same as its Baa3 rating. Moody's also said that the pool is composed of various equipment types, including federal energy equipment, transportation, software, material and handling, and machinery equipment. The rating agency also noted that one credit strength is a historically strong and consistently managed financing portfolio, strong securitization pool performances and high credit quality of the underlying collateral.
For its part, Fitch says that a Nationally Recognized Statistical Rating Organization rates 90.26% of the 65 obligors that have 337 contracts with an average balance of $3.4 million, suggesting a strong vote of confidence in the underlying pool.
