The Verizon Master Trust is returning for its third issuance of the year, seeking to raise $1.3 billion in securitized notes backed by revenue from payment plans on mobile devices.
Actually, the VZMT trust will issue the 2023-2 and 2023-3 transactions simultaneously, according to Asset Securitization Report's deal database, and they will raise $932 million and $280 million, respectively, from the structured credit markets. Both deals are slated to close this week.
A slate of investment banks, including BofA Merrill Lynch, Citigroup Global Markets, Mizuho Securities, and RBC Capital Markets are all managers on the deal, according to the ASR database. According to Fitch Ratings and S&P Global Ratings, which will assign preliminary ratings to the deal, RBC Capital Markets is lead underwriter.
Cellco Partnership, which does business as Verizon Wireless, is sponsor, servicer administrator, marketing agent and custodian on the deal, according to the rating agencies.
Both consumer and business account receivables comprise the collateral pool, according to Fitch, but the split leans heavily to consumer-related assets, at 90.1%, with business assets comprising 9.94%. A vast majority of the assets, 82.34%, were originated at 36-month terms; with another 12.50% at 30-month terms and 5.15% of 24 months, according to Fitch. The longer terms weigh in as a positive, Fitch said, noting that consumers, increasingly, prefer to use their phones for longer periods of time. As of the VZMT 2023-1 issuance, Fitch said, it decreased its loss assumptions on upgrades to 0.25%, from 0.35%, the company said.
Some 38.2 million accounts are in the pool, with an aggregate principal balance of $21.5 billion. On average, the accounts have a principal balance of $563.67 and a monthly payment of $24.97, according to S&P. Customers have a weighted average FICO score of 723. S&P set its expected loss rate at 4.00%, the rating agency said.
In terms of credit enhancement, Fitch notes that the deal benefits from several forms, including overcollateralization (OC), a reserve account and excess spread. Classes A, B and C have initial hard credit enhancement levels of 19.25%, 13.00% and 9.25%, respectively. Initially, OC levels are 8.25% of the initial pool balance, which is also the target level while the notes are revolving. The notes will also receive support from a non-declining reserve account of 1.00% of the pool balance, plus excess spread of 11.30%.
Both S&P and Fitch say they expect to assign ratings of 'AAA' to the class A notes; 'AA' on the class B notes; and 'A+' on the class C notes. All of the notes have a legal final maturity date of April 21, 2031.
