Triton Container International is marketing its second shipping container securitization of the year, according to S&P Global
The $318.9 million Triton Container Finance VI LLC (Series 2017-1) is a $318.9 million transaction is the fifth deal in this asset class by anyone so far this year. It is backed by a portfolio of 97,207 containers with a net book value of $376.3 million.
The trust is issuing $303.4 million of Class A notes with a preliminary A rating from S&P Global Ratings. The size of the deal, as well as its grade, are in line with recent ABS transactions from Container Leasing International (d/b/a SeaCube), Textainer International and Seaco SRL.
Triton was the first to market with a $281 million transaction.
A vast majority of the containers (93,131) backing Triton’s latest deal are under a lease agreement, and most are long-term (91%) for relatively newer containers that average just 1.7 years (steel-made containers are used an average of 15 years before they are retired).
Wells Fargo, RBC and Nomura are the structuring agents.
Rated shipping container ABS transactions have been off the table for nearly three years, as modest trade levels after the financial crisis stymied demand. But marine cargo lessors have grown their fleets modestly in recent years due to favorable pricing on new containers as well as a slight uptick in global trade. Shipping lines have started to acquire their own containers, too, but are limited due to constrained liquidity, S&P has reported recently.
Since December, the spiking price of steel has doubled the manufacturing costs of containers, combining with an expected single-digit uptick in global trade to further boost demand for container leases, according to S&P.
More than 75% of containers in company fleets have multiyear leases, which S&P expects will allow shipping container lessors to stabilize operations even during periods of weak demand from shipping firms.
TCIL is the manager for the new transaction. It is a unit of Triton International, which was formed by a 2014 merger of TCIL and TAL Group. It was already one of the oldest container firms, and its merger with TAL allowed it to become one of the largest. TCIL’s 26% market share is more than double that of Textainer and Seaco (14% market) as well as Florens Container Services (15%).