Textainer Equipment Management is marketing the third securitization of the year of long-term shipping container leases, according to S&P Global Ratings.
The $300 million Textainer Marine Containers V Ltd. Series 2017-1 will issue 250 million in Class A notes with a preliminary A rating from S&P Global Ratings. The $50 million in Class B notes are rated BBB.
The notes are supported by net lease revenue and cash sale residuals on 120,973 containers owned by Textainer with a net book value of $386 million; over 7,000 are not currently being leased. The collateral includes 11 different types of containers according to S&P. Most of the containers are dry-freight; others are refrigerated, open-top and flat-rack.
More than 84% of the leases are long-term or direct-finance, which S&P says shields the leases from interest-rate reductions. The average age of the containers is 5.39 years, which the rating agency said is “relatively old” for an asset with only 15 years of useful life.
S&P also notes that cash flow results in this deal are lower than in other recent transactions, and that a high percentage (39.7%) of leases in the collateral pool are concentrated with the three largest customers.
Purchasers and bookrunners on the transaction are RBC, Bank of America Merrill Lynch, PNC and Pierce, Fenner & Smith.
The leasing market for shipping containers has improved enough since the financial crisis for marine cargo container lessors to have grown their fleets “modestly”. While shipping lines have started to acquire their own containers due to favorable pricing, but this trend has reversed “due to shipping lines’ constrained liquidity,” the S&P pre-sale report noted.
Global trade, which seeds the container lease demand, is expected to increase in the low single-digit percent range for the foreseeable future, according to S&P.
Textainer’s deal follows an April $196 million container ABS launch by rival Seaco, and a $281 million March transaction by TAL International.