Organization Root Tag

As corporate treasurers use the debt reorganization technique to head off disruptive defaults and bankruptcies, lenders seek more blockers and cooperation agreements to mitigate risks.

Affirm Asset Securitization benefits from overcollateralization in several forms. Target overcollateralization during the revolving period will equal 2.65% of the initial adjusted pool balance.

Since 2019, the portfolio has recorded five defaults—driven by bankruptcies—and each was resolved with a 100% recovery rate, Fitch said.

Recent rate movements have failed to result in significant purchase growth, but refinances are providing lenders some lift.

Purchases managed a small rise, but refinance activity held steady, according to the Mortgage Bankers Association.

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.

The concentration of electric vehicles also reached 17.8%, an increase from 15.3% in the 2024-B deal.

It is the third deal from the WOART program for the year, and could be upsized to $1.2 billion.

Total initial credit enhancement includes over-collateralization representing 8.95% of the initial pool balance, which is expected to build to a targeted level of 13.95%.

Among the credit challenges, is the lack of amortization on the loans, and the loans are heavily concentrated among states and MSAs.