In its second 144a securitization backed by a pool of loans and leases on new and used transportation, industrial, golf and related equipment, Verdant Receivables is looking to raise $319.7 million in asset-backed bonds.
The transaction will issue notes through A, B, C, and D notes through five tranches of notes, according to Moody's Ratings, which noted that Verdant will also service the underlying assets. The A1 notes, have a June 12, 2025 legal final maturity dates, while the A2 through D notes in the capital structure have the same legal final maturity date, Dec. 12, 2031, Moody's said.
The notes benefit from a range of credit enhancement techniques, including a non-declining reserve of 1.0% of the initial pool balance and an overcollateralization piece representing 3.75% of the collateral pool, initially, which will build to a target of 7.5% of the outstanding pool balance, Moody's said. The notes also benefit from a cash reserve account representing 1.0% of the pool balance.
Taken together, the A1 and A2 notes have total hard credit enhancement representing 15.5% of the pool balance; the class B notes benefit from 12.2%; the class C notes benefit from 8.6% in credit enhancement; and the D notes have 4.8% in total hard credit enhancement.
Citing the experience of Verdant's senior management team, Moody's noted that the deal has several credit strengths. Another is that an independent third-party company will provide the primary servicing, and the industry and equipment diversification levels are strong in this pool, the rating agency said.
The pool is granular, with 2,482 contracts, where loans account for 63.3% of the pool, while 33.7% are leases, and they are extended to 1,918 obligors, Moody's said. The equipment type is diverse as well, with tow trucks accounting for the largest share of the securitization value, with 16.14%. After that, recreation and construction account for the top three types representing 16.10% and 11.95% of securitization values, respectively.
Moody's assigns ratings of P1 to the A1 notes; Aaa to the A2 notes; Aa2 to the B notes; A1 to the class C notes and Baa2 to the D notes.
