An $833.8 million securitization of equipment finance from a unit of MassMutual is in the market.
The deal, MMAF Equipment Finance 2015-A, is the seventh asset-backed from MassMutual Asset Finance. The underlying loans and leases are from a “select group” of financial institutions and banks, said Fitch Ratings in a presale.
J.P. Morgan Securities is the lead on the transaction, which is divided into five A tranches. The short-term A-1 is rated F1+’ while the longer-term A-2 through -5 are AAA.’ Maturities vary from March 2016 to January 2023.
Some 82.1% of the underlying collateral carry an investment grade rating by a rating agency.
The most-represented borrower in the securitized collateral is the U.S. government, accounting for 11.6% of the total. This is a lower share than in the last MMAF deal rated by Fitch - the 2014-A - a credit negative for the current deal since the government is considered an excellent credit. But this is offset by the fact that the overall quality of the collateral is higher than in MMAF’s previous deals.
The program has a healthy track record, with “minimal” delinquencies and losses so far, Fitch said.
Accross all tranches the credit enhancement — the cushion protecting notes before their investors get hit with losses — is 10%, a full percentage point lower than in the 2014-A deal.
The full value of the pooled loans and leases is $921 million, consisting of 361 contracts with an average balance of $2.6 million. There are a total of 66 borrowers in the pool.
Transportation accounts for $28.7 million of the total.