Verizon Wireless is marketing bonds in its 10th overall securitization of device-payment plan receivables, which also represents the carrier’s third asset-backed transaction of 2019.
Verizon Owner Trust 2019-C will be offering $953.9 million in bonds via Barclays, including $850 million in a Class A-1 tranche split between fixed- and floating-rate notes. The A-1 notes have preliminary AAA ratings from Fitch Ratings and S&P Global Ratings, with 21.35% credit enhancement support – levels unchanged from
According to a Fitch presale report, Verizon’s pool of customer payments on cell-phone and other mobile device plans consists of 3.5 million receivables on 3.04 million accounts, which are the most included in a Verizon deal since 2017. The aggregate principal balance of the accounts is $2.12 billion, with an average of 20 remaining installment payments due on each.
The majority of Verizon accountholders are prime customers (average FICO of 711) who have an average tenure of nearly nine years (102 months) with Verizon – an indication of their likelihood to continue payments on devices.
Accounts with upgrade eligibility make up 49.2% of the pool, up from 47.7% of Verizon’s prior deal.
Fitch has estimated losses of 3.2%, but has worse-case scenarios between 4% and 4.5% due to the deal’s revolving period which could introduce riskier DPP contracts into the pool from consumers with lower FICOs.
