Volvo is preparing its seventh annual securitization of leases on trucks and other commercial equipment, according to Fitch Ratings.
The $724.06 million Volvo Financial Equipment LLC, Series 2017-1 will issue a money market tranche and three other senior tranches with AAA ratings; all four benefit from 10.95% credit support.
There is also an AA rated tranche with 8.45% credit support and an A rated tranche with 5.55% credit support. Those levels are up slightly from 10.34%, 7.65% 4.65% for Volvo’s previous deal.
Citigroup Global Markets is the lead underwriter.
This is the third such transaction that Fitch has rated.
The collateral pool consists of 81.6% trucks and 18.4% of commercial equipment. Of the pool, 13% is composed of dealer term loans, which have not experienced credit losses on the managed portfolio or prior securitizations
Credit characteristics are similar to Volvo’s two previous deals: the average principal balance is $194,703, the weighted average original term is 56.48 months and the weighted average seasoning is 6.15 months. The majority of contracts, 92.45% are for new equipment; just 7.55% is for used equipment. The largest geographic concentrations are in Texas (15.45%), California (7.78%) and Florida (5.5%). The largest obligor accounts for 0.92% of the collateral.