Navistar Financial Corp. was back was in the market last week with $600 million in a truck loan- and lease-backed private placement. The deal represents a refinancing of the $500 million series 2000-1 deal out of Navistar's Truck Retail Installment Paper trust. Navistar Vice President and Treasurer, A.J. Cederoth, said the company does not have plans to enter with another TRIP offering until its 2005-1 deal nears maturity. "Our plans will be to refinance in five years," he said.
JPMorgan Securities led the five-year deal, which was being marketed last week in the low 20 basis point area over one-month Libor for the senior A tranche and in the low 50 basis point area over Libor for the single-A rated B class, as of press time. By way of comparison, the Class A tranche of the 2000-1 deal, also five-year paper, priced at 34 basis points over one-month Libor.
The new deal's structure is comparable to that of the 2000-1 deal. "The TRIP transaction has a unique structure, which combines the liquidity of a revolving structure with the ability to term out warehoused receivables throughout the five-year revolving period," wrote analysts Moody's Investors Service in a December 2000 new-issue report.
Sources say last week's deal has a few modifications from the 2000 deal's structure, including tighter triggers and slightly lower initial credit enhancement. "We don't usually see this type of structure very often," said one source familiar with the deal.
For the 2000-1 deal, repayment of the notes came from a revolving pool of retail loans and leases on new and used heavy- and medium-duty trucks. Throughout the revolving period, the loan receivables were sold directly by Navistar to TRIP, however, the leases were originated and the vehicles were owned by a bankruptcy remote titling trust.
The $500 million deal from 2000 replaced a $400 million asset-backed commercial paper program and now that $500 million deal is being replaced by this $600 million offering. By steadily increasing its deal sizes, the company is likely adding capacity to reflect the growth that is taking place in the trucking industry, says the source.
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