Navitas Credit Corp. is pursuing its first securitization of small and mid-ticket commercial equipment lease and loan receivables of the year, and its third ever.
The Navitas Equipment Receivables LLC Series 2016-1 is backed by leases and loans with a total discounted contract base of $156.9 million. The contracts are for small-ticket equipment (transactions sized from $5,000 to $750,000) including titled equipment such as trucks as well as industrial and medical lasers. The asset pool consists of 4,978 contracts with an average remaining balance of $31,510 and remaining terms of 40.5 months.
The senior notes structure includes $60.1 million in one-year, money-market funds rated K-1+ by Kroll Bond Rating Agency and ‘R-1 (high)’ by DBRS, as well as $108.13 million in Class A-2 notes. The A-2 notes have preliminary ‘AAA’ ratings by Kroll and DBRS.
Fitch Ratings, it its presale report on the issuance, assigned only an ‘A’ structured finance rating to the A-2 notes – a grade that is five notches below its ‘AAA’ rating. It also declined to rate the short-term A-1 notes.
Fitch has limited Navitas’ ratings because Fitch has not rated the two previous Navitas deals, as well as the fact the nationwide equipment finance company has “a relatively limited operating history of managed portfolio performance through a full economic cycle and no paid in full ABS transactions.”
In the surbordinate tranches, the $25.2 million in Class B notes are rated ‘BBB+’ by Kroll and ‘BBB’ by Fitch and DBRS, while the $6.3 million in Class C notes are rated ‘BBB-’ (Kroll) and ‘BB+’ (Fitch) and the $3.18 million in Class D notes are rated ‘B+’/‘BB-. DBRS declined to rate the latter two tranches.
Navitas’ pool of obligors is diverse, with the top borrower accounting for only 0.49% of the total collateral assets.
Other equipment lease assets include software, gym equipment, restaurant equipment, furniture, computer systems and energy lighting systems.