Textainer prices first shipping container ABS in over a year
Textainer Equipment Management on Tuesday priced the first securitization of leased marine cargo shipping containers in over year, even with the overhang of rising global trade tensions and the ongoing coronavirus pandemic.
According to data from Finsight, the upsized $450 million transaction includes a $380.8 million Class A tranche with a 2.73% coupon. The notes are rated A by S&P Global ratings.
The Textainer Marine Containers VII Ltd. (Series 2020-1) transaction is the first issuance of container-backed notes since Textainer sponsored a $254 million transaction in April 2019. The Series 2020-1 notes are collateralized by the net book value of more than 130,000 ships primarily on multi-year leases to shipping lines.
The notes are the third series to be issued through the Textainer Marine Containers VII master trust. The ships involved in the current transaction have a weighted-average life of 5.75 years, older than the fleets backing notes from earlier issues in each of the past two years.
The ships, which include both dry ships and “reefers” (refrigerated) cargo ships, have a net book value of $375.57 million, according to a presale report from S&P Global Ratings.
S&P also assigned preliminary BBB ratings to a $69.2 million Class B notes tranche.
In its report, S&P acknowledged the ongoing disruptions in the shipping industry that could potentially impact the cash flow from lease receivables supporting the notes.
Because of the COVID-19 pandemic, “container trade volumes have declined and are expected to decline throughout 2020,” the report stated. S&P cited World Trade Organization statistics indicated merchandise trade have declined by 3% year-over-year, but that level accelerated to 18.5% in the second quarter.
The stay-at-home orders instituted in China and other Asian countries related to the pandemic resulted in container dislocations in Asian ports, according to S&P. “Furthermore, the lack of demand in the countries where the merchandise is delivered such as the U.S. and other European countries caused congestion in their respective ports of entry,” the report added.
The container-leasing industry has mitigated much of that stress due to the traditional multi-year contracts most lessors hold with shipping lines. Over 75% of marine cargo container fleets owned by leasing firms are on multi-year leases.
Textainer Equipment Management is one of the largest marine cargo container lease firms in the world, with a 15.9% market share. It trails Triton Container International (with 27.2% of the global lease market) and Florens Container Services (17.4%).