Fixed-rate loans and lease contracts on medical, trucking and transportation equipment will provide collateral for $582.3 million in asset-backed securities (ABS) from the North Mill Equipment Finance, series 2025-B.
North Mill Equipment Finance is sponsoring the deal, its second equipment securitization of the year, and is the servicer of the securitized pool, according to Moody's Ratings. Among the originators that supplied loans to the transaction, Pawnee Leasing accounted for roughly one fifth of the pool, Moody's said.
The current pool of 6,492 loans has an average balance of $89,705.86 and is highly granular and seasoned. The top obligor comprises 1.44% of the pool and the top five accounts for 5.14% of the statistically discounted contract balance as of the cutoff date. This kind of granularity is a positive credit characteristic because pools like this are less volatile during economic downturns.
Another positive: a credit analyst manually reviews the pool's underwriting decisions, instead of just leaving it all to automated underwriting, Moody's said.
Also, most of the pool is composed of contracts on new vehicles (78.6%) and loans (85.3%).
Asset Securitization Report's deal database notes that the deal is slated to close on August 8, with
North Mill Equipment Finance will repay the notes through six tranches of class A, B, C, D and E notes, which will repay noteholders sequentially. The class A notes benefit from total hard credit enhancement equaling 38.90%, while classes B, C, D and E benefit from 31.40%, 24.20%, 17.10% and 11.70% in total hard credit enhancement, respectively.
Credit enhancement includes a reserve account equaling 1.00% of the pool balance, initial over-collateralization representing 10.70% of the pool balance and excess spread.
Moody's assigns P1 to the class A1 notes; Aaa, Aa1, Aa3, A3 and Ba2 to the classes A2, B, C, D and E notes, respectively. The A1 notes have a legal final maturity date of July 15, 2026; while the rest of the notes mature on Jan. 18, 2033.
