SeaCube Adds to Fleet of Shipping Container ABS

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Container Leasing International, d/b/a SeaCube, is adding a $248.7 million deal to this year's fleet of shipping container securitizations.

Two series of fixed-rate notes will be issued in the transaction, CLI Funding VI LLC: $235 million of Class A notes carry a preliminary A rating from S&P Global Ratings, and $13.7 million of Class B notes rated BBB.  

Deutsche Bank is the structuring agent; Wells Fargo is joint bookrunner.

The 2017-1 series will share collateral with notes issued by the master trust in 2016 transaction, including a $370.2 million (net book value) portfolio of 66,526 containers, $36.6 million in factory unit containers, as well as a $14 million prefunding account for the purchase of additional containers for the collateral.

According to S&P, 75% of the collateral in the portfolio is concentrated in refrigerated containers, a product segment that historically has more stable demand and higher utilization rates. Nearly 95% of the leases are long-term or direct-finance agreements, which are not impacted by rate reductions during an economic downturn.

Among the risks to the deal, according to S&P, is the high exposure (35.6% of the pool) to the three largest customers (a stark concern given the 2016  bankruptcy and liquidation of Hinjin Shipping, one of the world’s largest shipping lines from South Korea).

After a slow recovery from the 2008 financial crisis, the shipping container market’s industry fundamentals have gradually improved and demand has increased despite only a modest growth in global trade. That boost in demand has been abetted by the declining inventory of containers from slowing manufacturing, as well as rising prices in containers due to the spike in worldwide steel prices this year.

SeaCube’s transaction is the fourth in 2017, following two years of dormant securitization activity. Also issuing deals this year include a $300 million transaction by Textainer; a $196 million container ABS launch by rival Seaco, and a $281 million transaction by TAL Internationalcompleted in March


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