T-Mobile Financial is preparing to issue $561.3 million in securitized notes through the T-Mobile US Trust 2025-1, secured by payments on retail equipment installment plans (EIP).
The deal will sell notes to investors through three tranches of notes, with the class A notes maturing on Nov. 20, 2029 and the B and C notes maturing in February an March 2030, respectively, according to Moody's Ratings.
The notes benefit from total initial hard credit enhancement of 19.5%, 14.5%, and 9.5% on classes A, B and C, respectively. Credit to the notes is shored up by subordination, overcollateralization, and a non-declining reserve account that amounts to 1.00% of the initial adjusted pool. Because the receivables to not generate interest, yields are generated through purchasing the equipment installment plans.
Almost two thousand receivables from 1,705 accounts will compose the collateral pool, according to Fitch Ratings, which also rated the deal. Account holders have a FICO score of 707 on a weighted average (WA) basis, with 19 remaining installments.
Amortization will start after the deal's two-year revolving period, according to Fitch Ratings' analysts. On each payment date during the revolving period, the trust will make deposits from collections upgrades and installment plans into the acquisition account. That money can be used to buy additional receivables, but only if they meet certain conditions.
In one credit positive, T-Mobile must remit upgrade payments equal to the remaining unpaid balance of the receivable. Otherwise, companies like T-Mobile sometimes withhold those upgrade payments in cases of financial stress, instead of turning them over to the trust.
Barclays is the deal's lead underwriter, according to the rating agencies. Asset Securitization Report's deal database, meanwhile, says BNP Paribas and RBC Capital markets joins Barclays as the deal's managers.
California, Texas and Florida have the largest portions of accounts, by balance, with 14.8%, 11.4% and 9.5%, respectively.
Fitch assigns AAA, AA and A to classes A, B and C, respectively. Moody's assigns Aaa, Aa1 and Aa3 to the A, B and C tranches, respectively.
