Commercial Credit Group floats $420.6 million in ABS on equipment contracts
Commercial Credit Group is preparing to raise $420.6 million in asset-backed securities (ABS) as it navigates a sector managing several challenges, from the Ukraine war to slowing GDP and higher inflation.
Its transaction, CCG Receivables Trust, 2022-1, will issue notes backed by fixed-rate commercial equipment loans and leases that Commercial Credit Group originated. The collateral pool includes 2,190 contracts to 1,451 obligors from all four of Commercial Credit Group’s business segments: transportation (44.8%), construction (34.2%), waste equipment (12.1%) and machine tools (8.7%), according to a pre-sale report from FitchRatings. The contracts have an average contract balance of $200,611.
The CCG transaction’s managed portfolio and securitizations have had low net losses due to strong recovery performance, despite the fact that default performance has historically been volatile.
BMO Capital Markets is the lead underwriter on the deal, which will issue notes with two legal final maturity dates — June 14, 2023 for the $92.5 million, A-1 class, and July 16, 2029 for the A-2 through D notes. 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 account for 96.6% of the pool, while leases account for 3.34%. On average, the contracts have a balance of $200,611.
Commercial Credit Group is the servicer, while Vervent, Inc., serves as the backup servicer, according to Fitch.
On a weighted average (WA) basis, the financing contracts underpinning CCG Receivables Trust have an annual percentage rate of 9.8%, an original term of 51.8 months and seasoning of 8.7 months.
The pool is also well diversified both geographically and by obligors, with Texas making up 15.8% of the obligors’ locales, followed by California with 10.2%, Florida with 8.1%, Illinois with 5.8% and Georgia with 4.9%. In terms of obligors, the largest accounts for 1.3%; the top five represent 5.7% of the pool, the top 10 accounts for 9.2%, and the top 20 obligors represent just 14.5% of the pool.