Finco is returning to the securitization market to sell $561.3 million in asset-backed bonds secured by a revolving pool of unsecured retail equipment installment plan (EIP) T-Mobile contracts that it originated.
T-Mobile US Trust 2024-2 will issue notes through three tranches of classes A, B and C notes, according to a pre-sale report from Moody's Ratings, which rated the deal along with Fitch Ratings. The notes have total initial hard credit enhancement levels of 19.5%, 14.5% and 9.5% on the A, B and C notes, respectively.
T-Mobile Financial, or Finco, will service the notes, which strengthens the deal's credit outlook, according to Moody's. Fitch, meanwhile, notes that the TMUST 2024-2 pool is composed of EIPs of varying original terms. On a weighted average (WA) basis, Fitch also notes, the receivables have a FICO score of 707. Of the 1.1 million contracts in the pool, about one third have a FICO score below 650, a level that Fitch considers subprime.
Fitch did note that in TMUST 2024-2, the final maturity date is set in relation to the final payment of the notes in the most stressed scenarios, respectively, which is a departure from prior issuances. In previous deals the data was set to a sum of the revolving period, the term of the longest contract and a cushion period of six months. Still, this should only have a neutral effect on the credit quality of the notes, one of several neutral factors.
RBC Capital Markets is the lead underwriter on the deal, according to the rating agencies. Asset Securitization Report's deal database also notes that Barclays, RBC Capital Markets and SMBC Nikko Securities America are managers on the deal, which has an August 13 closing date.
The notes have initial hard credit enhancement of 19.5% on the class A notes and 14.5% and 9.5% on classes B and C notes. Maturity dates range from March 30, 2029 through July 20, 2029, Fitch said.
Fitch assigns AAA, AA and A to classes A, B and C, respectively, while Moody's assigns Aaa, Aa1 and Aa3 to the respective classes.
