A pool of loan contracts on mostly new medical equipment will collateralize $213.3 million in asset-backed securities (ABS) from the MMP Capital 2025-A transaction.
While MMP Capital has sold securitized bonds backed by equipment before, this will be the first one secured by medical aesthetic equipment contracts, according to Moody's Ratings. The deal will sell notes to investors through three tranches of classes A, B and C notes.
MMP Capital 2025-A will repay investors sequentially, Moody's said. Notes have a legal final maturity of Dec. 15, 2031, with total hard credit enhancement levels of 41.0%, 18.0% and 11.0% on classes A, B and C, respectively, Moody's said. The credit support consists of subordination, 10% in overcollateralization, with a 14% target, and a fully funded, non-declining reserve account of 1.00% of the initial adjusted discount pool balance.
Excess spread might also be available to the notes, according to Moody's. The rating agency set a 7.25% cumulative net loss expectation for the deal.
Deutsche Bank Securities is the MMP Capital's lead underwriter. In addition to sponsoring the deal, MMP is also servicer, while GreatAmerica Portfolio Services is the backup servicer, according to Moody's.
The collateral pool, which contains 1,420 loans, is very granular, which Moody's considers a credit strength, because as granularity increases a pool's volatility typically decreases. The top obligor consists of 0.43% of the statistical discounted contract balance, while the top five accounts for 1.71%. MMP Capital has an average contract balance of about $127,684.
Moody's assigns Aa3, A3 and Ba3 to classes A, B and C, respectively.
