Kubota Credit Corp. is marketing its first-ever term securitization, a $300 million transaction backed by agricultural, construction and turf equipment loans.
Fitch Ratings assigned preliminary ratings of AAA’ to the class A notes issued under the trust, Kubota Credit Owner Trust 2014-1. Fitch expects to rate the money market fund tranche A1+’. The credit enhancement for 2014-1 is 4.00%.
JP Morgan is the lead underwriter on the deal.
The pool is comprised of 16,787 loans. The majority of the contracts included in the pool (87%) are retail installment loans secured by new agricultural equipment originated by Kubota Credit. “Agriculture collateral historically has been the best performer within KCC’s managed portfolio,” analysts noted in the Fitch presale report.
According to the Fitch presale report, only 81% of the loans in the pool have FICO scores. However, these borrowers have strong credit quality and a weighted average FICO of 741. Borrowers in the remaining 19% of the 2014-1 pool are underwritten based on commercial standards.
The weighted average original term of the pool is 59.04 months and 95.46% of the loans have zero APR.