Volvo is coming out with a deal backed by loans on trucking and construction equipment.
Volvo Financial Equipment Series 2016-1 consists of $663 million of bonds, according to a presale from Fitch Ratings.
The deal is the sixth of its kind from VFS US, a financing unit of the Swedish carmaker AB Volvo.
Previous transactions have performed well. Cumulative net losses on the outstanding securitizations are projected to be below 1.00%.
The Class A notes consist of three tranches, sized at $186 million each. The A-1 money-market tranche matures on Feb. 15 2017, while the A-2 piece is due on Oct. 15, 2018 and the A-3 piece on Feb. 15, 2020.
Credit enhancement—the cushion against losses—for the A class is 10.35%. For the B notes it’s 7.65% and for the C notes 4.65%.
Loans on trucks account for 83.86% of the collateral, and construction equipment for 16.14%.
In terms of geographic concentration, some 13.58% of the borrowers behind this deal are located in Texas. The next largest contributor to the pool is California, with 8.04%, and then Florida, with 5.20%.
Societe Generale is the lead arranger on the transaction.
Fitch rates AB Volvo ‘BBB.’
