In its first deal of the year, VFS is preparing to sponsor $735.9 million in securitized bonds, with proceeds from loans financing trucking, transportation and construction equipment providing collateral for repayment.
Mizuho Securities, BNP Paribas Securities and
The P1-rated notes mature on Sept. 15, 2025. The rest of the notes are all rated Aaa, but the A2, A3 and A4 tranches are slated to mature on May 17, 2027, Oct. 16, 2208 and July 15, 2031, respectively, Moody's analysts said.
The collateral pool is composed of 3,404 loans, Moody's said. On a cumulative basis, Moody's expects the asset pool to have a net loss of 1.25%, down from 1.50% in the prior deal. Among the positive credit attributes in VFET 2024-1, the sponsor's portfolio has a stable managed portfolio performance, with delinquencies and net losses at consistently low levels since 2010. As of June 2024, the total 31-day-plus delinquencies for the combined portfolio is 2.22%.
Geographically, the loan borrowers are distributed mostly to Texas (11.33%), Illinois (7.26%) and California (5.33%), according to Moody's. The loans have an average balance of $220,368, and on a weighted average (WA) basis have a gross adjusted annual percentage rate of 8.44%.
The collateral mix is also improved, with new equipment accounting for 94% of the poo, Moody's said. New equipment historically see higher recovery rates than used equipment. Also, medium and large truck fleet obligors see some of the lowest loss levels, since the larger businesses that lease them are more quipped to navigate shifts in the industry.
But there is a credit challenge, as transactions backed primarily by trucking equipment
are exposed to the overall economy's health, and their receivables performances are cyclical, Moody's said.
As for credit enhancement levels, all of the notes have a total hard credit enhancement level of 9.0%; which includes an initial reserve of 0.75%, Moody's said.
