A collateral pool of prime, closed-end vehicle leases on Nissan and Infiniti vehicle models will secure $750 million in notes coming to the market from the Nissan Auto Lease Trust (NALT), 2023-B. The latest issuance is from a program with a strong recent performance record and could be upsized to $945.7 million, potentially.
Nissan Motor Acceptance Company (NMAC) originated all of the leases, and is serving as seller, servicer and sponsor, according to ratings analysts from Fitch Ratings. Most of the underlying leases in the pool (71%) are financing Nissan brand vehicles, while the Infiniti brand accounts for just 29% of the vehicle leases, according to a Fitch Ratings presale report. Further, the top five vehicle models represent 77% of the collateral pool, slightly higher than 71% seen in the 2023-A transaction.
NALT 2023-B has plenty of institutional banking support, with Citigroup Global Markets acting as lead underwriter, along with BofA Securities, MUFG Securities Americas and US Bancorp Investments, according to Fitch. Aside from the underwriters, Asset Securitization Report's deal database lists several deal managers, including BNP Paribas and Societe Generale.
The transaction will repay investors using a sequential-pay structure, with itself offers the notes some level of credit protection, according to Fitch. Moody's Investors Service, which will also rate the notes, says NALT 2023-B will operate with several forms of credit enhancement, including initial hard credit enhancement of 22.91%, and initial overcollateralization (OC) of 22.51%, according to Moody's. Otherwise, the notes will benefit from a reserve account starting at 0.40% of the initial pool balance, which will hit a target of 0.65%; and excess spread of 0.04%, the rating agency said.
Further, a cash reserve account will provide liquidity to the deal, according to Moody's.
Fitch noted that on a weighted average (WA) basis, NALT 2023-B has a FICO score of 767, the highest to date for the formula; an original term of 35 months and remaining term of 26 months.
The rating agencies also noted that the pool is collateralized by 31,922 contracts, and the lease installment revenue appears to be pretty well diversified geographically. New York accounts for 18.47% of the collateral pool; Florida, 12.93%; New Jersey 11.24%; California 8.07%; and Texas rounding out the top five states, with 7.81%.
Fitch intends to assign ratings of 'F1+' to the A-1 notes, which have a legal final maturity of July 15, 2024. Classes A-2-A/B through A-4 will receive ratings of 'AAA'.
Moody's expects to rate the notes similarly, giving 'P-1' to the A-1 notes; 'Aaa' to the A-2a/A-2b notes and 'Aaa' to classes A-3 and A-4.
