Verizon’s first mobile-device financing securitization of 2021 also marks the debut of a new master-trust shelf the carrier plans to utilize for a revolving pool of device payment-plan contracts.
Verizon Master Trust, Series 2021-1 is a $962.2 million transaction that represents Verizon’s 14thterm securitization to date, including its eighth publicly rated deal. But it is the first series from the new Verizon Master Trust which will periodically issue notes that – similar to bank credit-card ABS structures –will be designated to specific groups of accounts.
Previously, Verizon’s securitizations were backed by discrete pools of consumer device contracts.
The Series 2021-1 collateral pool will involve nearly 3.6 million receivables accounts with an aggregate principal balance of $2.53 billion. The accounts have an average principal balance of $707.10, with an average monthly payment of $31.80. The contracts have remaining installment periods averaging 23 months.
The weighted-average FICO of borrowers is 706.
Moody’s Investors Service, Fitch Ratings and S&P Global Ratings have assigned preliminary triple-A ratings to an $850 million tranche of Class A notes, which will carry an expected coupon of 0.86%. The notes will be supported by 22% credit enhancement, including the subordination of a $67.2 million Class B tranche (rated Aa1 by Moody’s and AA+ by S&P) and a $45.7 million Class C tranche (rated A1/A+).
The transaction structure allows for an initial three-year revolving phase of up to three years, in which collections may be used to purchase additional accounts into the series.
Verizon intends to issue other group-backed series from the trust in which the pools for each group may be distinguished by various characteristics, according to S&P. Segmentation could possibly involve varying discount rates, eligibility criteria, concentration limits, interest rates, required overcollateralization percentages, revolving periods, amortization events, anticipated redemption dates or final maturity dates, S&P’s report noted.
