Special units of beneficial interest in a pool of fleet leases, loans and related pool vehicles will secure $750 million in asset-backed securities to be issued from the Wheels Fleet Lease Funding 1.
Wheels LLC is sponsoring the Series 2023-2 deal, which is the fourteenth term securitization from the program, according to ratings analysts from Moody's Investors Service, and it also originated the loans. Wheels is a subsidiary of Donlen, and along with LPUSA, it originated the underlying loans and will service them.
BNP Paribas, PNC Capital Markets and TD Securities are listed as managers on the deal, according to the Asset Securitization Report's deal database.
Donlen and LPUSA's involvement as a servicer is considered a credit strength, the rating agency said. Its managed portfolio, which performed well even throughout the 2007-2008 recession, chalked up consistently low historical rates of delinquencies and net losses, Moody's said. The pool of underlying loans is comparable to the WD_Fleet, but this transaction, known as WFLF 1, 2023-2 has a higher concentration of top lessees and is also more concentrated by industry, the rating agency said.
The transaction will issue fixed-rate bonds through five classes of notes, according to Moody's which will assign ratings to five tranches of notes. The class A and B notes will receive 'Aaa' ratings; class C notes will receive ratings of 'Aa1'; the class D notes will be rated 'Aa3' and the class Es will be rated 'A2', the rating agency said.
Ratings analysts at DBRS Morningstar will assign ratings to three tranches, according to the ASR database. DBRS intends to assign ratings of 'AAA', 'AA' and 'A' to classes A, B and C, respectively.
Moody's did point out a few potential ratings challenges, though, including that new fleet vehicles and related leases could be added to the pool, while existing ones continue to depreciate. That could change the pool composition over time.
Wheels Fleet Funding 2023-2 contains 225,027 open-end leases. On average the leases have a securitization value of $25,093. On a weighted average (WA) basis the leases have an original maturity of 58 months, with 46 months of remaining maturity on a WA basis. Cars, vans and light-duty trucks comprise 94.1% of the pool, while medium- and heavy-duty trucks account for 4.4% and equipment leases another 1.5%.
As for credit enhancement, classes A, B, C, D and E have 14.75%, 12.25%, 8.50%, 6.25% and 5.51%, respectively.
