Securitization

Iskandar and Kaveh have a liquidity reserve of about $16.3 million at closing, and a cash-trapping trigger if the three-month average class A debt service coverage ratio (DSCR) falls below 1.45x.

Zayo Issuer, series 2026-1 and 2026-2, uses a master trust structure that will initially issue five tranches of classes A, B and C notes, and can issue additional classes if they meet certain conditions.

The deal will issue floating-rate notes, through the A-1B tranche, while underlying variable-rate loans are pegged to either CME Term SOFR or the 30-day average SOFR.

The sophomore outing follows a similar structure as the Clarus 2024-1, with six tranches of class A, B, C, D and E notes. The A2 tranche will issue the bulk of notes, $165.4 million.

Oil remained lower by more than 10%, but the benchmark two-year Treasury note, erased its gain for the day, to yield about 3.79%.

The public and large institution segment make up 89.7% of obligors, up from the 87.7% seen in DEFT 2025-2, an increase that was driven largely by an increase in the large enterprise institution segment.

It has since drawn a new $2.25 billion 364-day term loan and upsized another securitization facility from $1.25 billion to $1.75 billion.

Loans with original terms longer than 60 months now represent 71.7% of the pool, up from 70.4% in the prior deal.

Losses stemming from the 2022 vintage have been offset by excess spread, while cure and roll rates signal caution.

All 244 underlying loans initially had a period of fixed rates between 60 and 120 months at origination and are currently ARMs, although none are interest-only.

Banks have latched onto risk transfers in record numbers to gain regulatory relief that paved the way for new lending, acquisitions or shareholder payouts.

The deal increased its initial credit enhancement levels across the board, with the A-, BBB and BB- notes benefiting from levels of 21.89%, 1.89% and 5.74%, respectively.

Loans originated under Sallie Mae's Smart Option loan program, which have demonstrated significantly lower default rates compared with those from the Signature program, make up the entire collateral pool.

Full documentation was completed on just 17.9% of the pool, Fitch said, while bank statements and debt service coverage ratio (DSCR) account for 17.6% and 28.0%, respectively.

The mortgage's proceeds, with $518 million of cash equity contributed by the sponsor, will also be used to buy Hawaii-based Alexander & Baldwin, a commercial property REIT.

The deal structure includes credit support from a full turbo structure. All excess cash flow will be used to repay note holders without the issuer receiving excess spread until the notes are fully repaid.

For the first time, the FIAOT shelf includes commercial vehicles originated through the SFS's Captive Program, extending vehicle financing to small business owners.

Full documentation was only applied to 2.6% of the underlying pool of mortgages. Debt-to-income, however, was 23.3% when it was applied.

Before the transaction has amortization event, principal payments will enter full turbo during the deal's first 12 months.

Some 90.3% of the loans have had a clean payment history over the past 12 months, with a 1.3% delinquency rate.