The Verizon Master Trust program is returning to the capital markets, to raise another $750 million in asset-backed bonds from a pool of revenues on mobile device payment plans, due to close in about a week.
Known as VZMT 2024-3, the deal will issue notes through four tranches of A, B and C notes, according to rating agencies Fitch Ratings and Moody's Investors Service. Most of the notes will pay on a fixed-rate benchmark, but the A1B tranche could be priced against the one-month Secured Overnight Financing Rate (SOFR), according to the Asset Securitization Report's deal database.
Aside from that one tranche, the other notes are expected to be fixed rate, the rating agencies said. All of the notes have the same legal final maturity date, April 22, 2030, according to Moody's. The two class A notes have a total initial hard credit enhancement level of 19.25%. Meanwhile the class B and C notes have total initial hard credit enhancement levels of 13% and 9.25%, respectively.
Overcollateralization, excess spread, subordination provide credit enhancement to the notes, as well as an initial reserve account representing 100% of the outstanding notes, Moody's said.
That the underlying contract holders prioritize using their smartphones and other mobile devices suggests that they are likely to prioritize payments related to those products, Moody's said. Further, the interest-free loan and monthly payments make the product more affordable to customers. In fact, the average monthly payment in the trusts is $23.40.
The pool also contains some 50,543, 391 contracts, with a weighted average tenure of 116 months. Also on a WA basis, the borrowers have a FICO score of 723, an original term of 36 months, and a remaining term of 25 months.
Wells Fargo Securities, Mizuho Securities, RBC Capital Markets and SMBC Nikko Securities America are all underwriters on the deal, according to Moody's. ASR's deal database also notes that they are on the deal as managers.
Moody's assigns Aaa to both A tranches; Aa1 to the tranche and A1 to the C tranche, while Fitch assigns AAA to both A classes; AA+ to the B tranche and AA- to the C tranche.
