ABS

A reserve account starts off at 0.0%, but its funding level varies in line with three-month average excess spreads, if it falls below certain thresholds.

Borrowers are considered prime in this pool, but Fitch Ratings notes that delinquency rates have been increasing since 2022.

Total hard credit enhancement will represent 4.5% of the note balance, and initial reserves amounting to 2.0% of the pool.

The pool is diversified, with its top obligor accounting for 3.2% of the pool balance, and the top 10 obligors account for 14.1%.

From the Q3 2021 to the early 2024 vintages, cumulative gross loss (CGL) levels had been trending up, likely due to consumer credit normalizing, due to inflationary pressures.

Fitch notes that 74.8% of the collateral pool, made up entirely of 3,103 loans, is backed by trucking—or transportation—equipment.

It is the program's second issuance to come to market with a pool made up entirely of consumer loans.

There is also a trigger embedded in the deal, attached to cumulative net losses that would set off a full turbo payment.

Amortization will start after the deal's two-year revolving period, when the trust will deposit revenue including collections and upgrades into the acquisition account.

Affirm grade A loans account for 34.8% of the pool and have historically produced the lowest defaults in the sponsor's managed portfolios.

The current pool has smaller exposures to the construction and turf sectors compared to the 2024-2 series, which have seen higher loss rates than the agriculture sector.

Unlike most aircraft securitizations, Gilead 2025-1 uses a mortgage amortization style, de-levering at a lower rate compared to a more typical straight-line payment style.

While SoFi uses a third-party servicer for both of those product types, it services its entire consumer loan portfolio.

The 4th aviation ABS this year indicates a busy year ahead for the sector.

The $500 million in similarly structured deals pool insurance-premium finance loans.

Among the deal's main credit strengths is that the real estate assets are protected by robust physical security, and 83.5% of the tenants have investment-grade credit ratings.

For conservative and risk-averse insurers, the vehicles are a relatively cheap and safe way to take part in the private credit boom that's financing mostly unlisted and leveraged companies.

All the class A notes benefit from total initial hard credit enhancement totaling 21.0% of the pool balance. Classes B, C and D benefit from 17.0%, 11.5% and 6.5%, respectively.

RG&E, series 2025-A, is the second utility cost recovery securitization this week, and is another first-time issuer.

Both forward-flow agreements and the larger asset-backed securitization market are becoming more popular, as consumer debt is growing.