Maritime Partners, a major financier to the domestic Jones Act maritime trade, is planning to tap the asset-backed securities (ABS) market for $235.3 million.
The Jones Act is a section of the Merchant Marine Act of 1920, and requires that goods shipped between U.S. ports be transported on vessels built, owned and operated by U.S. citizens or permanent residents.
Actual shipping vessel usage dropped to less than 70% during the COVID-19 pandemic, according to DBRS Morningstar, which plans to issue ratings to the deal. That setback did not severely impact the company's bottom line, though. Through Q2 2020 the company has had a 100% utilization rate, which reflects its operator clients' use of funds and lease obligations. That rate dropped slightly to 98.4% during the pandemic, the rating agency said.
That single tranche should garner a rating of 'A', the rating agency said. Maritime Partners' collateral pool consists of 316 vessels on lease to 19 different charterers, the rating agency said. All of the vessels, which have an initial appraised value of $372.3 million, are on long-term leases with a weighted average (WA) original term of 7.2 years and a WA remaining charter term of 4.0 years as of the statistical date of March 31, 2023, according to DBRS.
Drilling down further into the collateral pool, DBRS found that towboats accounted for the largest ratio of vessels, at 33.65%, followed by tank barges, hopper barges and other, at 31.31%, 30.83% and vessels classified as other, at 4.21%, respectively.
Overcollateralization of 36.81% and a liquidity reserve account provide credit enhancement. DBRS says the deal has an expected closing date of May 11.
The Metairie, La.-based company has been operating since 2015, and appears to have a strong industry reputation, with an executive management team experienced in maritime leasing, investing and operations among other types of experience. The company also made a number of acquisitions since its founding.
Historically the company has had to write off only one receivable, which happened in 2020, which was related to a minor contract dispute and represented only 0.06% of charter revenue for that year, DBRS said.
