Porsche Financial Services had a big hit in May with bonds backed by loans to buyers of Lamborghinis and Bentleys; now it’s testing investor appetite for leases on these luxury brands.
The sports car company is selling $850 million of securities backed by monthly lease payments on new and used Porche-brand automobiles, sport untility vehicles, and, for the first time, new Bentley and Lamborghini vehicles, according to presale reports.
J.P. Morgan Securities LLC is the underwriter.
Porsche Innovative Lease Owner Trust 2014-1 will issue $128 million money market notes due September 2015 and three classes of notes with preliminary triple-A ratings from Standard & Poor’s and Fitch Ratings: $295 million due in January 2017, $342 million due November 2017, $85 million due September 2020.
Leases on Bentley and Lamborghinis, which can retail for up to $230,000, are limited to less than 10% of the pool's aggregate securitization value. The pool also includes lease contracts on the Macan, Porsche's newest vehicle series; these leases make up approximately 3.8% of the pool's aggregate value.
Among other differences between this deal and Porche’s previous lease securitization, completed in 2013, the percentage of new vehicles increased to 98.4% from 97.4%, according to S&P’s presale report.
The percentage of leases with original terms of less than or equal to 24 months decreased to 12.1% from 19.6% and the percentage of leases with original terms between 49-60 months increased slightly to 4.8% from 4.1%.
In May Porsche sold $488.3 million of bonds backed by loans to buyers of Bentleys and Lamborghinis, in addition to its Porsche brand models in a deal underwritten by Barclays. Part of the appeal was the strong credit quality of the borrowers and the perception that these vehicles would hold their value well, reducing losses to investors in the event of a default.
In its presale report on the lease securitization, Fitch notes that Porsche only began originating Bentley and Lamborghini leases in 2012, meaning that there is not much historical performance data. But it expects that used car prices for such high end vehicles could be volatilie, and so is assuming that losses on the resale of vehicles coming off lease would be at the high end of those for Porsche models.