Trade Credit Group launches $420.6 million in ABS on equipment contracts
The commercial credit group is preparing to raise $420.6 million in asset-backed securities (ABS) as it navigates a sector that manages several challenges, from the war in Ukraine to the slowdown in GDP and the rise of inflation.
Its transaction, CCG Receivables Trust, 2022-1, will issue notes backed by fixed-rate commercial equipment loans and leases that Commercial Credit Group created. The collateral pool includes 2,190 contracts for 1,451 obligors across Commercial Credit Group’s four business segments: transportation (44.8%), construction (34.2%), scrap equipment (12.1%) and machine tools (8.7%), according to a FitchRatings pre-sales report. The contracts have an average balance of $200,611.
The managed portfolio and securitizations of the CCG transaction recorded small net losses due to a strong recovery performance, despite the fact that the default performance has always been volatile.
BMO Capital Markets is the primary underwriter of the deal, which will issue notes with two final legal maturity dates – June 14, 2023 for the $92.5 million, Class A-1, and July 16, 2029 for tickets A-2 to D. . Ratings range from F1+ on the A-1 notes to “AAA”, “AA”, “A” and “BBB” on the $283.2 million, class A-2; $21.9 million, Class B; $14.2 million Class C and $8.7 million Class D notes.
The collateral pool consists almost entirely of loans, which make up 96.6% of the pool, while leases make up 3.34%. On average, contracts have a balance of $200,611.
According to Fitch, Commercial Credit Group is the repairer, while Vervent, Inc. serves as the backup repairer.
On a weighted average (WA) basis, the financing contracts underlying CCG Receivables Trust have an annual percentage rate of 9.8%, an initial term of 51.8 months and a run-in term of 8.7 months .
The pool is also well diversified both geographically and by obligor, with Texas accounting for 15.8% of obligor localities, followed by California at 10.2%, Florida at 8.1%, Illinois at 5, 8% and Georgia with 4.9%. In terms of debtors, the largest accounts for 1.3%; the top five represent 5.7% of the pool, the top 10 represent 9.2% and the top 20 obligors represent only 14.5% of the pool.