Trinity Rail has priced a $333.84 million securitization of railcar leases, the company’s first deal of 2012.
The deal consists of two tarnches, both of which carry an 'A' rating from Standard & Poor’s: a $145.36 million A-1 class and a $188.48 million A-2 class.
In a press release published today, Trinity said the two tranches had a blended coupon of approximately 3.0% and an average weighted life of approximately eight years at closing.
The transaction, dubbed Trinity Rail Leasing 2012 LLC, is backed by $430.76 million portfolio of 4,866 railcars. It has the right to lease revenues from the portfolio and any residual cash flows from the sale of railcars.
Trinity said proceeds will be used to repay a portion of its railcar leasing warehouse facility, fund future growth of its lease fleet, and for general corporate purposes. At Sept. 30, the company's lease fleet, including vehicles held by a leasing joint venture, included approximately 71,255 railcars with a utilization rate of 99.0%.
In a report rating the deal, S&P said that the recovery in railcar shipping volume, which began in early 2010, has benefited the railcar leasing business, and it expect this trend to continue, assuming the economy continues to grow.
It cited the Association of American Railroads' report that U.S. freight carload traffic, after increasing in both 2010 and 2011, declined by 2.7% for the first 41 weeks of 2012 ending Oct. 13, 2012, compared with the same period in 2011. This primarily reflects a 10% decline in coal traffic, which comprised around 40% of total carloads; however, motor vehicles and related carloads traffice, petroleum carloads and container traffic all increased.
S&P said increased domestic oil production has resulted in strong demand for tank cars, and this appears to be a long-term trend.
The last deal Trinity brought to market that was rated by either S&P or Moody’s Investors Service was a $475 million revolving warehouse loan the firm obtained early in 2011. Prior to that, Trinity sponsored a $369.2 million securitization of railcar equipment late in 2010.