Wheels Inc. is marketing $512.70 million of bonds backed by auto fleet leases, according to rating agency reports.
Wheels SPV 2, LLC, Series 2015-1 is the issuer’s fifth public term securitization; the previous one was completed 12 months earlier, in May 2014.
The Series 2015-1 trust will issue a $124 million class A money market tranche and three longer-dated class A tranches with a preliminary AAA’ rating from Fitch Ratings. All four senior tranches benefit from credit enhancement of 8.02%. There is also an $8 million tranche of class B notes with a preliminary AA’ rating and an $11.9 million class C tranche with a preliminary A’ rating.
Standard & Poor’s also assigned a AAA’ rating to the money market tranche and two of the three senior tranches; it did not rate the rest of the capital structure. In its presale report, it noted that Wheel’s previous deal did not include a fourth tranche of class A notes.
J.P. Morgan Securities is the lead underwriter.
The notes are backed by payments on a pool of 24,564 leases open-end vehicle fleet leases with 290 corporate clients for cars, light-duty trucks and other vehicles originated and serviced by Wheels. S&P noted that this is a decline from 300 obligors for previous deal; 300 is also the threshold level that we generally use to begin incorporating the risk of obligor bankruptcy in its stressed loss scenarios. “This results in a higher stressed 'AAA' loss level for the series 2015-1 notes compared with the series 2014-1 notes,” the presale report states.
Fitch also pointed to obligor concentration as an important rating consideration, but described concentrations in this deal as “consistent” with Wheels’ previous securitization, noting that the top one, 20 and 50 obligors in 2015-1 represent 3.00%, 49.24% and 73.53%, respectively.
Credit enhancement is also consistent with the prior transaction, according to Fitch.