A pool of special units of beneficial interests (SUBIs) in a revolving fleet of leases, loans and related pool vehicles will secure $750 million in asset-backed securities, issued through the 2024-2 series of Wheels Fleet Lease Funding 1.
All the notes have a legal final maturity date of June 21, 2039, according to ratings analysts at Moody's Ratings. Most of the notes will be benchmarked to the three-month interpolated yield curve, according to Asset Securitization Report's deal database. One exception is the A1B tranche notes, which will be priced against the one-month Secured Overnight Financing Rate (SOFR).
Yields on the notes are expected to have a tight range, 4.92% on the triple-A rated A1A notes to 4.89% on the class B notes, with Aaa and AA ratings from Moody's Ratings and DBRS Morningstar, respectively.
RBC Capital Markets, Scotia Capital and Wells Fargo Securities are managers on the deal, according to the database.
The transaction has a nine-month revolving period. All of the leases are closed-end, where the issuer bears the residual value risk, and more of them can be added during that period. There is a 3% securitization value limit to the aggregate value of all residuals associated with the closed-end leases, Moody's said.
Historically, the rates of delinquency and net loss on Wheels, the sponsor, are among the transaction's major credit strengths, according to Moody's. The rating agency noted that fleet lease ABS pools have historically had low delinquency and loss rates, because corporate leaseholders typically prioritize their fleet lease payments over other types of debt obligations. The vehicles are essential assets necessary for business operations, so this payment priority upheld performance levels even during the 2007-2008 recession, Moody's said.
Underlying lessees are medium-to large corporations with strong credit profiles on their fleets for sales and services, Moody's said. Of the 288,988 open-end leases in the collateral pool, the top 73 leases make up 75.1% of the master trust, and 83.9% of companies in the master trust also have public ratings from Moody's, the rating agency said. On average they have a securitization value of $26,046.
The deal database says the notes benefit from credit enhancement including a cash reserve account, overcollateralization, and a senior-subordinate repayment structure.
Moody's assigns Aaa to the A1 through the class B notes; and Aa2, A2 and Baa1 to classes C, D and E notes. DBRS, meanwhile, assigns AAA to the A1A and A1B notes; AA to the class B notes and A to the class C notes.
