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Triton selling another $250M in bonds backed by shipping-container leases

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Triiton Container International Ltd., the world’s largest lessor of marine cargo shipping containers, is planning its third securitization of contracted receivables in less than a year.

Triton Container Finance VI LLC Series 2018-1 is a $250 million transaction; the trust will issue a $238.4 million Class A tranche with a preliminary A rating from S&P Global Ratings. The $11.65 million subordinate tranche is rated BBB.

Triton VI is the second container-lease deal in the market for 2018, following last month’s $349 million transaction by CAI International.

Triton is the largest marine cargo container lessor, following its 2016 merger with TAL International, with a 25.9% market share based on cost-equivalent units (CEUs) in the marketspace, ahead of competitor lessors such as Florens Container Services (17.9%), Textainer Marine (16.1%) and Seaco (11.5%).

Last year Triton completed two securitizations totaling $769 million.

The pool of assets backing Triton VI 2018-1 involves 294,947 containers with a net book value of $1.15 billion. Nearly 63% of the collateral, by net book value, are the standard “dry” containers (both 40-foot and 20-foot) for shipping non-perishable manufactured goods. Other containers include specialty refrigerated types, flat racks and “genset” power-supplied units.

The portfolio contains collateral limits on the types of containers that can be added to the pool, such as a 25% cap on special (nonrefrigerated) containers, a 7% limit on leases to a single shipping firm.

About 87.5% of the container leases in the portfolio have long terms (two years and longer), which shield Triton from downturn-related rate reductions. Over 70% are at least four years in length.

TCIL is the subsidiary of Triton International, formed in 2016 from the merger with TCIL and TAL Group.

Last year saw a resurgence in shipping container securitizations after a two-year market drought in which only a single $140 million securitization took place. Beginning in 2016, the rise in the cost of shipping-container manufacturing priced many shipping lines out of the market for purchasing their own fleets.

In its presale report, S&P noted that its expects 2018 global trade growth in the low single digits, and that the share of leased containers in the global shipping fleet will remain at 45-50% for the near term. That outlook is unaffected by the potential global trade war should U.S. trade partners take retaliatory measures against President Trump’s announced plans for tariffs on steel and aluminum imports.

S&P director Jing Xie said the shipping container industry is shielded from the exposure of any trade slowdown of a particular geographic region or nation, including the U.S. “Containers are global assets,” Xie said in an email to Asset Securitization Report, “so the demand for container leasing ties to global trade.”

“Potential retaliatory trade policy can lower trade volumes between the U.S. and other countries, but trades among other countries can pick up,” Xie added. “One example is that China may become even more important in world trade and you may see increased trades between China and former trade allies of the U.S.”

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Esoteric ABS